Cisco Action Shows Splits Matter Most

It's strange to see shares of Cisco advance solely as a result of the company's stock split, not its strong quarter.
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The most frightening thing about this

Cisco

(CSCO) - Get Report

quarter is that this stock market seems to put more emphasis on the stock split than on the greatness of the quarter. Over and over again I heard that Cisco's stock was flying in after-hours trading because of its announced stock split.

Even

The Wall Street Journal

got into the history of Cisco's stock splits, verifying the seeming importance of this event.

Weird.

But I can't blame this market or Cisco or journalism. Last quarter, Cisco reported a very good number and didn't announce a stock split.

I was here when it was reported. I knew it was a good number. The company, however, announced no split. And the stock started getting hit immediately. I was in disbelief that this split mattered. I remember screaming to my partner,

Jeff Berkowitz

, Who cares about a darn stock split? What gives?

But my younger, wiser partner said that, without a split, the stock would get killed. It would be a sign of management's lack of confidence in its future.

He was right.

Something's wrong when you have to factor in splits to trading. Cisco

should

move up because the company was less bearish than before. Cisco will move up because of the split.

What a sobering world, where the stock trumps the company. I guess we better get used to it.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Cisco. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

letters@thestreet.com.