When Cisco Systems posted strong quarterly earnings last week, the good news buoyed the spirits of many investors--and not just the ones who hold shares of the networking company's stock.
It has long been considered a tech-industry bellwether, and the logic goes that Cisco's performance echoes the health of the IT industry in general. But other economic indicators may be showing that the rest of the sector still has a ways to go.
In Cisco's third quarter, ended May 1, the company posted net income of $1.2 billion, up 23% from a year earlier. Revenue rose 22% to $5.6 billion.
Sales were strong across the board, and orders from U.S. businesses rose roughly 15% quarter over quarter. Its advanced technology sectors, which include IP telephony, security, and wireless, were particularly bullish, all posting double-digit growth. Overall quarterly sales growth topped 4%; Cisco had predicted growth of between 1% and 3%.
CEO John Chambers, who usually errs on the side of restraint, painted a picture of a revived economy and rebounding business spending, saying in a conference call that he's more optimistic than he was last quarter and claiming that Cisco customers "are becoming more optimistic and starting to spend."
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