Cisco's Showing a Pulse: Is Tech Spending Back Up?

Business spending on technology goods and services is 'returning,' The Wall Street Journal thinks, using Cisco's (News - Alert) healthy Q2 results as Exhibit #1.

Cisco's second quarter results for the period ended January 23 include net sales of $9.8 billion, net income on a generally accepted accounting principles basis of $1.9 billion or $0.32 per share, and non-GAAP net income of $2.3 billion or $0.40 per share.

John Chambers (News - Alert), chairman and chief executive officer, Cisco, correctly calls this performance 'outstanding Q2 results. They exceeded our expectations… we saw dramatic across the board acceleration and sequential improvement in our business in almost all areas.'

Wall Street was surprised, too, as the results outdid the rosiest of rose-glasses prognostications. CNN reported that the results 'sailed past the most optimistic expectations and rose for the first time in more than a year.'

Chambers was bullish on the economy in a call with analysts, according to the Journal, saying he planned to hire up to 3,000 workers in coming quarters: 'This is one of the most robust positive turnarounds I've seen in my career.'

Maybe from where John sits things look good. 3 Bloomberg (News - Alert) Multimedia reported a couple days ago that the U.S. 'may lose 824,000 jobs when the government releases its annual revision to employment data on February 5, showing the labor market was in worse shape during the recession than known at the time.'

Cisco's results 'add to a growing body of evidence that companies are starting to open their wallets after the recession,' the Journal says: 'The Commerce Department last week said business spending on equipment and software rose at a 13.3 percent annual rate in the fourth quarter, adjusting for inflation. That was the fastest growth since early 2006.'

Evidently it’s not just Cisco, either: 'Intel (News - Alert) last month said revenue for the division that sells chips for corporate server systems rose 42 percent. Sybase, known for database software that is popular among financial-services companies, last week reported a 34 percent jump in profit for the period ended in December -- which it characterized as the best quarter in its history.'