But beneath the happy talk and careful management of the street -- Cisco shares had been falling into earnings -- lies a company that remains tied to carrier customers and is unable to prosper in new markets.
For its most recent quarter, Cisco reported net income of 51 cents per share on $11.5 billion in revenue, beating expectations of 48 cents per share in earnings and $11.36 billion in revenue. Sterne Agee raised its estimates on the stock with a price target of $26 per share. It was trading at $24.38 as of 10 a.m. Thursday, up 6.9% for the day and 3.7% year to date.
That sounds good, but a year ago Cisco had 13% more net income and 6% more in sales. The bottom line improvement was spurred by layoffs.
Cisco rose to prominence in the 1990s as companies built their own networks. It was, briefly, the world's most valuable company, in the year 2000, with a market cap of over $500 billion. Cisco's market cap today is about $117 billion.
Its slump came as phone companies gradually replaced traditional switches with data networking. Tech investors know if you're looking to carriers for growth you're headed for a bad place. And on Internet issues like net neutrality, long-time CEO John Chambers now parrots the carrier line.
In the last few years the company has made several moves to get out of that box, but each has been quietly abandoned.
Consumer products? In the last years Cisco has spun out its Linksys router unit to Belkin and dropped its Flip mini-camcorder. Technology analysts say it has abandoned the small to medium business market as well.
A social strategy? Cisco entered this market with a product called Quad enterprise social networking, re-branded it to WebEx, its online conferencing product, and has now abandoned it in favor of working with Jive Software (JIVE).
The Internet of Things? The general manager of that group, Guido Jouret, quietly resigned this month to be replaced by Rod Soderbery, general manager for enterprise networking.
Now Chambers is telling his troops that security will be a key focus and loudly proclaiming Cisco will "crush" VMware (VMW - Get Report) in the cloud with a software-defined networking unit called Insieme. Chambers also proclaims interest in the public cloud market with an offering called InterCloud but its strategy there is called fuzzy at best.
None of these new technology areas -- consumer, social, Internet of Things, or even cloud -- has produced a positive hit to revenue. Cisco's latest quarter was driven by mobile carriers increasing their network capacity in the U.S. and northern Europe, while sales in emerging markets sagged.
That's why the technology press is quietly hearing rumors that Chambers may be heading out the door. He turns 65 this year and, while he's as legendary in his business as Larry Ellison of Oracle (ORCL - Get Report) is in database software, he occupies a fading niche.
John Chambers and Cisco may be able to fool Wall Street, but how much longer can they fool Sand Hill Road in Silicon Valley?
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At the time of publication, the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.