Cisco Systems Leads Tech Higher

Michael Teague  |

Tech shares rallied on Thursday, led by Cisco Systems’ (CSCO) 13 percent leap to as high as $24.25.

The increase dragged other sizeable network and communications stocks along with it, including Juniper Networks (JNPR), up nearly 4 percent, Palo Alto Networks (PANW) up 3.6 percent, Riverbed Technology (RVBD) up 4.4 percent.

Cisco reported fiscal third-quarter earnings during late trading on Wednesday that allowed shareholders and investors to breathe a little easier after concerns that the general trend in global tech markets away from hardware and toward software and cloud services was beginning to take its toll on the company.

On revenue of $12.2 billion, Cisco earned $2.5 billion or $0.46 per share, against the prior year period during which the company earned $2.2 billion or $0.40 per share on revenue of $11.6 billion. Excluding items, the company earned $0.51 per share, ahead of expectations of $0.49, while revenue beat expectations of $12.18 billion.

For the current quarter, the company predicts earnings per share of $0.50 to $0.52, which would be a match with estimates, and sees revenue up between 4 and 7 percent from the prior year period, a range of $12.16 to $12.5 billion, also in line with estimates of $12.47 billion.

The company cited better sales in the Americas as well as in emerging market countries, and saw strong performances from its wireless, data center, services, and service provider video categories, along with an 4 percent overall increase in product orders.

Cisco is seen as a bellwether for the hardware-based tech industry due to its global reach, as well as its extensive involvement in publicly funded projects throughout the world. Many of these companies, such as Juniper Networks and IBM (IBM) have struggled recently as users increasingly shift from desktop to mobile, and from hardware to software-based systems.

Correspondingly, the company’s earnings can be seen as a vindication of its attempts to adjust to the new landscape, with increased focus on wireless and cloud computing, as well as pursuing acquisitions in international markets.

Other tech shares that appeared to benefit from Cisco’s performance on Thursday included VMware (VMW), up 2.6 percent, along with EMC Corporation (EMC), up nearly 5 percent, and Hewlett-Packard, up 2.5 percent.

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