Investors went gaga over Cisco's big dividend raise last week, sending its shares soaring on the hopes that tech firms were going further into dividends. However, as senior technology analyst Eric Bleeker notes in the following video, focusing on Cisco's dividend alone could be a big mistake for tech investors.
That's because Cisco also announced that U.S. state and local government spending was up 17% from last year. Government spending accounts for 20% or more of total revenue for many IT firms and has been a lacking segment of revenue growth for several years, so a rebound in government spending could be a pretty sizable driver investors aren't watching. Not only that, but Cisco also expressed hope that enterprises are loosening purse strings after cutting back spending earlier this year amid fears that Europe would weaken the world economy.
That's not to say the IT spending environment's recovery is assured, but Eric says not to ignore Cisco's early notice of a rebound. To see Eric's full thoughts and a couple of stocks investors should take note of if IT spending rebounds, watch the following video.
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