Much has been made of the Nasdaq Composite Index’s recent surge to the 5,000-point level, a milestone not achieved since the height of the so-called “dot-com” bubble in March 2000. At the time, venerable software titan Microsoft was the most valuable company in the composite, but its status as number one was briefly surpassed in late March 2000 by Cisco Systems, the leading supplier of data networking equipment and software. Cisco’s core business of routers, switches, access equipment and network-management software was widely perceived as the backbone on which the Internet operates, and thus worthy of all of the exuberance investors placed in it at the time.

Of course, any investor around since 2000 knows what happened next. The dot-com bubble burst, and by October 2001, Cisco’s market cap was knocked down a staggering 85% below its peak — the single most meaningful contributor to the overall decline in the Nasdaq during this period. …

…In 2011, the company embarked on a series of initiatives designed to enhance shareholder value and improve its financial performance, beginning with the declaration of its first ever quarterly dividend. Since that first payout of $0.06 four years ago the quarterly dividend has grown consistently to the current $0.21 per share.

Later in 2011, following a disappointing earnings report, CEO John Chambers announced an effort to eliminate $1 billion in costs, including a workforce reduction of 6,500. Long seen as a company primarily focused on growth, this 2011 announcement represented a sea change in how Wall Street viewed the company. Cisco was now a more mature firm seeking to stabilize and enhance its bottom-line earnings. …

…In the most recent quarter, Cisco beat earnings-per-share expectations for the sixth straight quarter, with $0.53 per share earnings compared to expectations of $0.51, and $0.47 a year ago. It reported revenue of $11.9 billion in the quarter, beating expectations and up 7% from a year ago, the firm’s highest annual growth rate in three years. …

…Chambers’ vision is for Cisco to become the leader in all areas of IT infrastructure. In addition, the firm is discussing its long-range plan to position itself for the “Internet of Everything,” the basic idea that more and more physical objects will become digitized electronically in the future and be of greater service when connected to each other. According to its calculations, this opportunity may represent a $14.4 trillion (that’s trillion with a “t”) market over the next decade. Given Cisco’s formidable market position in related areas, it’s clear why the company is so optimistic about current prospects. …

…Once a poster child for the “tech wreck” of 2000-2001, Cisco is showing signs of being more mature, leaner, and better positioned to be a global tech titan. …



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