'Fast Money' Recap: Cisco's Back

NEW YORK ( TheStreet) -- Cisco ( CSCO) shares were up in after-hours trading on Wednesday after it posted a strong earnings report.

The networking equipment maker posted a revenue and earnings beat while raising its dividend.

Pete Najarian said on CNBC's "Fast Money" TV show that Cisco has stabilized and is benefiting from a return of enterprise spending.

Ron Insana said Cisco stock had telegraphed the company's turnaround for some time. He also said Cisco CEO John Chambers has managed the restructuring quite well.

For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw on TV

Tim Seymour said the earnings results vindicate what Chambers has been doing to reshape the company and put him back in a position where his comments on such matters as government spending have to be listened to.

Seymour said Cisco has reinvented itself as it focuses on its core business of routing, switching and services. Karen Finerman said the stock is definitely worth a look because its valuation is not stretched in anyway.

Brian Marshall, an analyst with ISI Group, also said Cisco is moving in the direction, but he liked Juniper Networks ( JNPR) better over the next four quarters.

CNBC reporter Jon Fortt, who was on the Cisco conference call, noted that company's guidance showed an EPS of 45 cents to 47 cents in the third quarter along with a gross margin of 61.5% to 62%. Chambers said the next several quarters may be difficult because of the disruptive impact of the floods in Thailand.

As for derivative trades, Najarian liked Riverbed Technology ( RVBD), F5 Networks ( FFIV) and Akamai ( AKAM).

Melissa Lee, the moderator of the show, shifted the panel's attention to Diamond Foods ( DMND), which was plunging more than 40% after saying it was restating its 2010 and 2011 financial statements.

CNBC senior stocks commentator Herb Greenberg said that move jeopardizes Procter & Gamble's ( PG) sale of its Pringles Brand to Diamond Foods for $2.35 billion.

Greenberg said there are provisions in the merger agreement that would allow P&G to exit the deal easily. Finerman said she couldn't see how the deal could hold together, while Greenberg noted that P&G has said the deal has drawn interest from other parties.

Lee shifted to shares of Wholefoods ( WFM), which were up on better-than-expected earnings. The stock hit a new 52-week high and is up 11.74% year to date.

Karen Short, an analyst with BMO Capital Markets who is bullish on the stock, said the company is a "league of its own" in its emphasis on health and wellness. She said traffic at Wholefood stores continues to accelerate.

Lee moved next to the takeover battle between Illumina ( ILMN) and Roche Holdings. Illumina's board rejected Roche's $5.7 billion hostile bid today.

Cutting through the corporate phraseology, Finerman said Ilumin is essentially saying the offer is grossly inadequate, while Roche is saying it's ready to pay more. She said Roche, at this point, can offer a higher bid or take the risky step of waiting for shareholders to soften up the Ilumin board at an upcoming meeting.

Commenting briefly on Visa's ( V) better-than-expected earnings, Najarian said he liked the direction both Visa and Mastercard ( MA) are taking and urged investors to buy on dips.

Lee noted that Bank of America ( BAC) continues to move higher, touching $8.13 today. Najarian said the options activity have been unusually heavy, with 1 million contracts traded and a heavy bias to the upside.

Finerman said the stock still trades well below book value, while Seymour said the stock can go even higher if it can normalize its earnings.

Lee brought in CNBC reporter Kayla Tausche to discuss Groupon ( GRPN), which was down 13% after a big EPS miss. She said the big issue is the company's marketing expenditures which reached $769 million in 2011 and some pecularities in the tax rate in certain locations that reached 1,600%.

Seymour said he did not like the direction Groupon is heading with its low-margin business. Insana questioned a business that wasn't using its cash for acquisitions.

Mike Murphy and Najarian squared off on Whirlpool ( WHR), which is up 50% this year.

Taking the bearish case, Murphy, who is shorting the stock, said the rally is way overdone for a stock that is priced for perfection. He argued the stock is not cheap in terms of its P/E, and that Whirlpool has set the bar too high for its earnings and margin growth.

Najarian, taking taking the bulls case, said the Whirlpool's earnings forecast is not that far fetched if the U.S. housing market starts to improve. He also pointed out that Whirlpool is a big player in Brazil and is managing its inventory well.

In a brief segment on a bill that the House is taking up to ban inside trading in Congress, CNBC reporter Eamon Javers said the House bill goes beyond the Senate bill, which has been approved. The House bill would prohibit convicted legislators from collecting taxpayer pensions and block legislators from special IPO access.

In the final trades, Seymour said he would sell Tata Motors ( TTM). Insana said to get out of Internet-related stocks like Groupon. Finerman liked Children's Place ( PLCE). Najarian liked JPMorgan Chase ( JPM) the most in the financial space.

-- Written by David Tong in San Francisco.

>To contact the writer of this article, click here: David Tong.

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