Shares of Cisco Systems Inc. are set to gain on the market open after a strong earnings release and encouraging words about the global economy from CEO John Chambers.
More importantly, investors hope positive comments from Cisco CEO John Chambers can perk things up on a somewhat gloomy morning (European debt worries are weighing on the market). “There was major momentum,” said Chambers of business in the quarter. ” It was quite remarkably balanced across the board, and you would say we are on our way to a reasonably good recovery.”
Chambers is often looked to for economic insight because of Cisco’s large role in the technology market as well as Chambers knack for monitoring and analyzing data to look for turning points in the economy. He was one of the first major technology executives to alert investors about the slowdown, and he correctly called a turn in the economy last year.
Cisco announced Q2 fiscal year 2010 (Q2FY2010) reveue of $98. billion, an 8% increase over the comparable quarter last year. It saw Q2FY income of $1.9 billion in GAAP terms and $0.32 earnings per share (EPS). Including special items, Cisco earned $0.40 per share, beating analysts estimates of $0.35.
More importantly, Chambers said he expected to see economic conditions “accelerate” and upped his forecast for growth for Cisco in the current quarter, which he pegged at 23 to 26 percent.
Cisco continues to generate and stockpile massive amounts of cash — the company reported that cash and cash equivalent and investments for the quarter was $39.6 billion, up about $4.3 billion from last quarter.
Chambers commented specifically on a “robust positive turnaround” in the service provider segment, which he said was the biggest turnarounds he’d seen in his career.
Perhaps most importantly, Chambers said that with the strong recovery, Cisco could start adding employees back to its workforce.Cisco said it hired 2,000 employees in the last quarter and expected to hire 2-3,000 more in this quarter.
In the pre-market, Cisco shares were trading up $0.42, or 1.82%, to 23.49.