Even harder is trying to convince investors to be a bit more patient in expecting the sort of returns the company once produced, helping it to become at one time one of the largest companies in the world.
Those tech-bubble days are over. While expectations have leveled off a bit for the entire sector, in Cisco's case it's at the point where too little is now expected and investors are ignoring the good that still remains.
The fact of the matter is, in the all-important routing and switching businesses where it competes with Hewlett-Packard (HPQ), F5 (FFIV) and Juniper (JNPR), Cisco still owns over 50% and 60% share, respectively, in those markets.As noted, those business are no longer growing at the rates they once did. But with their strong recurring revenue they remain areas of Cisco's business poised to surge due to expected demand for data. Cisco is banking on a recent study that suggests bandwidth for increased data will soon come at a premium. There will be no other company better positioned to capitalize on that growth. What's more, the company is now so certain of its future and its ability to compete effectively that it has decided to return value to shareholders by increasing its dividend by 75%. The new quarterly dividend of 14 cents per share now represents an annual yield of 3.2% of the company's current stock price -- offering yet another reason to be bullish on the company. In its most recent fiscal fourth quarter, Cisco earned $1.9 billion, or 36 cents per share, compared to 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. Analysts were expecting net income of 45 cents per share on revenue of $11.62 billion, an increase from the 35 cents earned the previous year. 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%. For the full fiscal year, the company earned $8.04 billion, or $1.49 per share, 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.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV