Wall Street Watch: Cisco Earnings Indicate an Economy En Route to Growth

Cisco systems
Cisco systems

Cisco (CSCO) is starting to step up.

The tech bellwether that provides networking equipment including routers and switches posted better than expected quarterly results after Tuesday's market close.

Revenue climbed 6% to $11.9 billion, and adjusted earnings rose 12% to $0.48 a share. These may not seem like major steps forward, but analysts were settling for a profit of $0.46 a share on $11.8 billion in revenue. History would indicate that they probably saw this coming. Cisco has now landed just ahead of Wall Street's profit targets for 19 consecutive quarters.

This is welcome news for more than just Cisco shareholders -- it's good news for all investors. Cisco is a great proxy for Corporate America. Cisco argues that it's at the center of the mobile, cloud, and video trends. It's the leader in gear that makes networking connectivity possible.

If Cisco is holding up well it means that companies are feeling comfortable enough to upgrade their networking equipment.

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Things haven't always been easy for Cisco, but its sustainability has never been in doubt. Cisco closed out the year with $45 billion in cash. Sure, a lot of that is locked up overseas to avoid repatriation taxes, but it's still a great cushion for the company to have. Cisco has been cracking open that piggy bank to use money on small acquisitions as well as buying back shares and shelling out a modest dividend.

Cisco didn't provide an outlook for the current quarter, but the past -- for now -- is encouraging.

Other Things Worth Watching

• Advanced Micro Devices (AMD) is not for sale, but thanks for asking. Shares of the PC chip maker climbed on Tuesday after a Reuters report claimed that the company had hired an investment banker to explore strategic options that may include either a sale of the company or of some of its assets. AMD spoke up on Tuesday -- after the market close -- to set the speculation straight. AMD has no intention of exploring alternatives. It is confident in its model and current strategy.

• Retail stock investors hungry for growth may want to try China to satisfy their speedster pangs. Vipshop Holdings Limited (VIPS) -- an online discount retailer for brands in China -- posted quarterly results on Tuesday night. Net revenue nearly tripled to $155.9 million, fueled by a 174% surge in its number of active customers. The bad news is that Vipshop isn't making a lot of money off of that growth. It posted a small adjusted operating loss for the period.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Cisco Systems.