Cisco Leads a Rally
Real ResultsIf one had to pick, this week would not be the best to announce corporate earnings, with conflagrations abroad and economic uncertainties at home. But Cisco’s steady-as-you-go performance after the bell Tuesday led a Wall Street rally and sent the company’s shares upward more than 15 percent.The Street responded to Cisco Pres. and CEO John Chambers’ guidance that showed revenue for the fourth quarter at $7.98 billion, up 21 percent from $6.6 billion in the same quarter a year ago. He forecasted revenue growth between 15 percent and 20 percent for the fiscal year ending in July 2007, higher than analysts’ predictions of a 15 percent rise.”With seemingly the entire Street expecting somewhat to outright soft guidance and a focus on the negative macro environment, Cisco clearly surprised the upside with strong fourth-quarter numbers, solid guidance and the most confident tone and positive commentary that we have heard from Cisco in the past two years,” Credit Suisse analyst Paul Silverstein was quoted in Forbes.com.”With no negative catalysts looming, and strong book-to-bill, backlog and order growth activity coming into the October quarter, we expect Cisco’s shares to continue to trend upward throughout the quarter back towards their $22 near-term peak of three months ago,” Silverstein added.Chambers said the results reflected Cisco’s long-term strategy of emphasizing networking innovation.”The record results for Q4 are due in part to the successful implementation of our strategy, given our vision of how the communications and IT industry would evolve,” Chambers said.”As intelligence moves throughout the network, the network is becoming the platform that enables most forms of communications and IT. Our business and technology architecture approach to this evolution is gaining both market share results and customer spend. The performance gave traction to the entire tech sector before the NASDAQ fell back late Wednesday, Reuters said.”Cisco’s strong quarterly results and upbeat outlook pushed up tech shares on Wednesday, cheering investors who had beaten down the sector after weak results from other tech heavyweights,” Reuters reported.Chambers’ faith technology innovation was also seen Wednesday in an op ed piece from him in CNET, in which he complimented Prime Minister Tony Blair for visiting Silicon Valley, and Cisco in particular, last week. “Blair’s visit to Cisco demonstrates that a decade after the mainstream introduction of the Internet, it remains one of the single-most important elements to our success as nations, industries and people,” Chambers wrote.