Cisco Fuels Tech Rally's Fire

SAN JOSE, Calif. ( TheStreet) -- Cisco's ( CSCO) ongoing rebound has added fuel to the fire of tech's rally, continuing the run of strong results from fellow heavyweights such as IBM ( IBM), Microsoft ( MSFT) and Intel ( INTC).

Clearly, 2012 is shaping up to be a better year for tech investors than 2011, when Silicon Valley was wrestling with massive uncertainty in Europe and the U.S. public sector. The Nasdaq Composite Index slipped 1.8% last year, while the Dow Jones Industrial Average gained more than 5%. So far this year, however, the Nasdaq has risen 12.4%, easily outpacing the Dow's gain of 5.5%.
Cisco has added fuel to the tech rally's fire.

Enterprise spending, in particular, is bolstering tech earnings, as evidenced by Cisco's strong second-quarter results, released after market close on Wednesday.

"Enterprise spending for the last two or three quarters has been pretty solid for us," Frank Calderoni, the Cisco CFO, said in an interview. Calderoni explained that Cisco grew its enterprise orders 7% year-over-year in the second quarter, while the company's service provider business climbed an impressive 12%, shrugging off the recent weakness noted by rival Juniper ( JNPR).

Widely regarded as a barometer for spending on networking gear, Cisco's results point to healthy demand for IT infrastructure. The fact that revenue from the company's switch business, which accounts for almost a third of its total sales, raised 8% year-over-year, should therefore be seen as a positive.

" This represented the fastest growth rate in over a year, and a marked improvement from declines of 3% to 9% in recent quarters," noted Sterne Agee analyst Shaw Wu in a note released on Thursday. "The Cisco turnaround story is real and intact."

Reflecting the company's improving fortunes, Cisco's stock has climbed more than 13% in 2012.

This earnings season has seen a surge in bullish sentiment from tech's bellwethers. Microsoft CFO Peter Klein, for example, recently said that enterprise spending is helping the software giant deal with a sagging PC market.

Like Microsoft, IBM also saw enterprise strength, particularly in its software business, where quarterly revenue was up 9% year-over-year. Big Blue has also been reaping the benefits of emerging markets, the company explained during its fourth-quarter conference call.

Microsoft shares have surged more than 18% since the start of the year, while Intel is up more than 10%. IBM, typically perceived as one of tech's high stability stocks, has gained 5%.

Storage and cloud computing are also hot at the moment, as evidenced by EMC's ( EMC) recent record fourth-quarter results.

Speaking during a conference call to discuss the numbers, EMC CEO Joe Tucci predicted "real growth" in IT spending in 2012, forecasting a 3% to 4% year-over-year increase. "IT spending in storage and data protection will grow faster than the IT industry average," he added, explaining that 'Big Data', which is dealing with vast quantities of enterprise data, security, and virtualization, will also outpace the industry spending average.

EMC shares have risen more than 22% this year, while shares of the company's virtualization subsidiary, VMware ( VMW), have gained 14.53%.

Another storage specialist, CommVault ( CVLT), also enjoyed good quarterly results recently, with revenue jumping 24% year over year. "Geographically, we had strong growth in Europe, the Americas and China," explained Bob Hammer, the CommVault CEO, during a phone interview to discuss the December quarter results. "It was a good, solid, quarter -- there's a significant increase in data growth."

CommVault's stock has risen 27.18% in 2012.

Software maker Symantec ( SYMC) is also enjoying a boost in enterprise spending, as shown by the company's strong third-quarter results last month.

In a recent interview Symantec CEO Enrique Salem said that he's seeing strong demand from corporations. As a result, Symantec's large deals hit an all-time high during the quarter. In the enterprise side of its business, the company clinched 674 transactions valued at more than $300,000, a hike of 24% compared to the prior year's quarter. Some 78% of these transactions included multiple products.

Shares of Symantec have climbed more than 15% this year.

-- Written by James Rogers in New York.

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