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The Other Cisco: Investors Ignore the Good

NEW YORK ( TheStreet) -- Cisco (CSCO - Get Report), the world's largest network equipment maker reported fourth-quarter earnings on Wednesday and it would seem that the company did its best-convincing job yet of why it deserves to regain its status as one of the best-run technology companies on the market.

Leading into the call, I recommended buying the stock in anticipation of what would be its sixth consecutive earnings beat. As a reliable mail carrier, it delivered!

For the quarter, analysts were expecting net income of 45 cents per share on revenue of $11.62 billion, an increase from the 35 cents (or 17%) earned the previous year. For the period May to July, Cisco said it earned $1.9 billion, or 36 cents per share -- representing an increase of 56% from the same period of a year ago when it earned $1.2 billion, or 22 cents per share. Excluding costs and special items, earnings arrived at 47 cents or 2 cents higher than consensus estimates.

The company reported revenue of $11.7 billion, beating analysts' estimates while topping last year's mark of $11.2 billion. The better-than-expected results were largely attributable to growth in North America -- in particular the U.S. as sales grew 7%. The company did not fare so well overseas and in particular Europe and the Middle East where it reported a 5% drop in revenue.

If you recall, this was the chief concern of management when it offered the less than favorable guidance in its Q3 report sending its stock tumbling by double-digit percentage points although it logged a beat in both the top and bottom lines. However, this time guidance was better and investors applauded by sending the stock higher by 5% to $18.21 in extended trading -- representing its highest level since May.

For the current quarter, the company expects earnings per share of 45 cents to 47 cents on revenue in the range of $11.5 billion to $11.9 billion - in line with analysts' EPS forecasts of 46 cents and revenue of $11.7 billion.

The company earned $8.04 billion, or $1.49 per share for the full fiscal year -- representing an increase of 24% from $6.49 billion, or $1.17 per share, in fiscal 2011, while revenue arrived at $46.1 billion, up 7% from $43.2 billion in the previous year.

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