Better-than-expected fourth quarter fiscal earnings help pump up Cisco’s share price on Thursday and — along with a promising jobs report — helped bolster the entire market during a wild roller-coaster week. The Nasdaq ended the day up 4.7 percent while the S&P 500 closed ahead by 4.6 percent.
Cisco shares rose nearly 16 percent today after the company reported fiscal fourth-quarter results that were slightly higher than analyst estimates. The company reported profits of $1.2 billion compared to $1.9 billion in the last fiscal fourth quarter a year ago. Cisco also said it expects revenue to rise up to 4 percent year-over-year in the current quarter.
In mid-July, Cisco announced it was axing 6,500 jobs in a massive restructuring plan, which led many analysts to believe the company was facing tough times ahead. The cuts cost the company a one-time charge of $1.3 billion, of which $750 million was recognized during this quarter’s statements.
“Cisco is executing well through its steep cost-cutting initiatives, which include headcount reductions, product design improvements, and R&D consolidation,” Daniel Morgan, portfolio manager with Synovus Securities, told VentureBeat via e-mail. “While not completely out of the woods, investors’ focus should slowly shift to the top line. Cisco’s turnaround is not a one quarter event, especially given the size of Cisco and the darkening macro economic environment. However, based on the ‘Street’s’ concern about the impact of a slowing economy and profit growth in the coming two to four quarters, the Cisco report gives some relief.”
Other technology and enterprise stocks benefited from Cisco’s good news today, including Microsoft (up 4.1 percent), Apple (up 2.7 percent), Google (up 2.4 percent) and IBM (up 2.3 percent). The stock market has been fluctuating wildly since Monday, when it spiraled downward on news that Standard & Poor’s had downgraded the United States’ debt rating to AA+.
What do you think about the market roller coaster? Are tech stocks the place to be?