Cisco Systems Inc. (CSCO), the world’s biggest maker of networking gear and the focus of a recent "Buy, Sell or Hold" feature in Money Morning, is not in any deal talks with any big companies, and apparently won’t be a bidder for data storage giant EMC Corp. (EMC), Cisco Chief Executive John T. Chambers told CNBC in an interview late yesterday (Wednesday).
While noting that he would "never say never," Chambers told the cable news channel that Cisco doesn’t "have any negotiations with any large companies [under way] at this time," noting that his company is focused on buyouts of small- and medium-sized companies.
Shares of the San Jose-based Cisco jumped $1.28 each, or 5.65%, to close at $23.93 yesterday. Investors bid up the stock of the networking giant after its fourth-quarter results exceeded Wall Street estimates, suggesting the bellwether tech giant’s business remains strong - despite the global financial slump. The fourth-quarter results were released last Tuesday.
The company’s stock had recently been trading at its lowest level in nearly two years, though shares jumped 3% on Tuesday ahead of the earnings statement, and then nearly 6% yesterday in response to the report, MarketWatch.com reported.
For the three months ended July 26, Cisco reported net income of $2.01 billion, or 33 cents per share, compared with profits of $1.9 billion, or 31 cents per share, a year ago. Adjusted income was actually 40 cents a share, a penny ahead of the 39 cents analysts had been expecting Cisco to report.
Revenue was $10.4 billion, an increase of 9.9% from revenue of $9.4 billion in last year’s fourth quarter and ahead of the $10.3 billion Wall Street was expecting. It also marked the first time that Cisco’s quarterly revenue exceeded the $10 billion mark.
Cisco’s broad product array and deep industry reach are reassuring investors that Chambers can boost revenue and profits even as companies trim their information-technology budgets.
In fact, orders from large corporations increased 13%, spurred by demand for equipment used in company data centers - results that easily outpaced the 5% increase in orders from telephone and cable-TV companies, Bloomberg News reported.
"It’s tough out there, no question," RBC Capital Markets analyst Mark Sue said in a research note.
