NEW YORK (TheStreet) -- A recent article suggesting the future growth potential of networking giant Cisco(CSCO) - Get Report caused a bit of uneasiness for Cisco investors. While it would appear that such a favorable outlook would inspire confidence and optimism among investors, instead it was suggested that perhaps I've set the bar a bit too high.

What this tells me is that, apart from disappointed analysts and the many sideline critics the company has created over the years, Cisco still has some making up to do with its own shareholders.

The company has now logged three consecutive earnings beats and will look to extend that streak on Wednesday -- despite some tumultuous times. As disappointing as the past couple of years have been, there are certainly plenty of reasons to suspect that the worst is behind the company.

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Investors now have plenty of reason to feel good about not only their positions, but also about the company's recent level of execution. The company is now strategically placed

to realize as much as 200% more value

in the stock over the next couple of years.

However, in the present day, the challenge continues to be overcoming doubt and there is no better way to do this than with market-beating earnings performance.

Expectations for the Quarter

First let's take a look at the company's fiscal second-quarter report for the period ending in January. Cisco then reported an impressive 44% increase in net income reaching $2.2 billion or 40 cents per share -- well ahead of the $1.5 billion or 27 cents per share it earned in the same period of a year ago, both topping analysts' estimate. Revenue arrived at $11.5 billion, an increase of 11% from the $10.4 billion in the same period last year. This was the third consecutive quarter it had beaten Wall Street expectations, showing at the same time just how keen it is on maintaining its leverage while improving its margins.

However the report also showed the company still has plenty of areas that it needed to fix. These are areas to which I will pay close attention during the coming announcement. Cisco experienced a 7% decline in growth orders, while rivals





(JNPR) - Get Report

performed appreciably better. I'll also be looking at how the company talks about spending its cash and what reinvestments it plans to make.

Cisco has had a long history of M&A and I continue to maintain that it would serve its growth interest if it were to acquire a company such as

Brocade Communications


. The company has been pretty open about the possibility of more acquisitions, but such a move is unlikely absent a showing of some strategic fundamental improvements.

As far as numbers for the quarter I expect the company to report earnings of 46 cents per share with gross margins arriving at 28%.

Bottom Line

Though Cisco is moving in the right direction, it has an uphill battle to convince a market that rarely forgives and certainly never forgets. The company has already demonstrated that it deserves to be back in the discussion of technology companies that consistently deliver solid market beating performances.

From an investment standpoint, the stock is trading at a multiple (14) that has not factored in the company's true future potential. Investors should consider adding Cisco at current levels ahead of earnings and continue to accumulate as its recent performances suggest that the stock will be trading at $30 in a relatively short period of time.

At the time of publication, the author was long CSCO.