NEW YORK ( TheStreet) -- Cisco ( CSCO) delivered some much-needed good news in a less-than-stellar tech earnings season on Tuesday, beating estimates and offering healthy guidance despite an uncertain macroeconomic environment. From spending headwinds to Europe and the looming threat of a fiscal cliff in the U.S., this is hardly the easiest time for Silicon Valley, as evidenced by Nasdaq's 5.26% decline over the last month. Prior to the release of Cisco's results late on Tuesday, there were concerns that Cisco could feel the same pressures that have impacted other tech heavyweights, such as Intel ( INTC) and IBM ( IBM). "Almost uniquely, Cisco beat expectations and guided such that consensus estimates are likely to rise this morning," wrote Stuart Jeffrey, an analyst at Nomura Equity Research, in a note released on Wednesday. "We see this as a major positive for Cisco given a backdrop of worsening US tech trends, rivals that missed and guided lower, and broad expectations (including our own) that estimates might be at risk of being cut." Bucking the trend, the tech bellwether offered decent guidance, predicting second-quarter revenue between $11.9 billion and $12.1 billion and earnings of 47 cents to 48 cents a share. Analysts surveyed by Thomson Reuters were looking for revenue of $12.02 billion and earnings of 47 cents a share. Jeffrey reiterated his buy rating and $22 price target for Cisco. Speaking during Cisco's earnings conference call, CEO John Chambers lauded the company's 6% revenue growth "in a very challenging market" noting that many of the firm's peers are reporting declines and lowering future expectations. The CEO, who guided Cisco through a recent turbulent spell, also pointed to the company's solid expense management, which delivered better-than-expected margins. Once again, Cisco's enterprise business proved key, with the San Jose, Calif.-based firm growing its U.S. enterprise revenue 9% compared to the prior year's quarter. Cisco also enjoyed a 13% hike in its stateside service provider revenue, much to the delight of investors, who have pushed the company's stock northward. Other highlights from the quarter were Cisco's 62.7% gross margin, up from 61.9% in the prior quarter, and its 27.9% operating margin, up sequentially from 27.5%.
"Cisco's performance stands out as one of the best in the IT world this season as the Company continues to execute well in a lackluster demand environment," wrote Brian White, an analyst at Topeka Capital Markets, in a note. "The combination of last night's performance and Cisco's attractive valuation should garner the attention of more value investors." White, who rates Cisco buy with a $23 price target, raised his second-quarter revenue target from $11.76 billion to $11.96 billion and his earnings estimate from 45 cents to 47 cents a share. The analyst also raised his fiscal 2013 and 2014 earnings forecasts from $1.82 to $1.92 a share and from $1.92 to $2 a share, respectively. Chambers returned repeatedly to the theme of Cisco as an "IT player" during the earnings conference call. Clearly, the company's future lies not just in networking, but in providing a broader range of hardware, such as its UCS server product, and services. "For the first time we are starting to see our leadership in IT, especially the UCS, pull through our communication products," he said. "This is especially important in terms of how CIOs are beginning to view Cisco, not just as a leader in communications, but view us as an IT player, who also does communications." Cisco's data center revenue, which encompasses UCS, climbed a massive 67% from the prior year's quarter, although at $417 million, still accounts for a relatively small proportion of total revenue. The company's services business, however, is much more sizable, with revenue growing 12% year over year to reach $2.6 billion, almost 22% of overall revenue. The Cisco chief also downplayed the risk of a looming fiscal cliff on the conference call, expressing confidence that Washington will work through the problem, albeit "with a bit of saber-rattling" on both sides. Similarly, Chambers is also confident that the U.S. can avoid a trade war with China, even after the damning House Intelligence committee report on Huawei and ZTE. "The two countries have to work very closely to get other," he said. "I think you'll see the two sides work it out, because it's in the best interest of the world to do in both economies, and, candidly, in the best interest of the U.S. as well." Cisco shares were up 6.53% to $17.95 on Wednesday. --Written by James Rogers in New York. Follow @jamesjrogers >To submit a news tip, send an email to: firstname.lastname@example.org