Evidence Is Piling Up: Enterprise IT Recovery Already Started

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There might be hope for enterprise computing stocks yet.

Networking giant Cisco Systems (NASDAQ: CSCO  ) opened the door to this new reality on Wednesday, when it reported strong first-quarter results and pointed out cheerful prospects in the domestic enterprise market. Storage specialist NetApp (NASDAQ: NTAP  ) just jumped aboard the same bandwagon with an estimate-crushing report of its own.

NetApp saw adjusted second-quarter earnings fall 19% year over year to $0.51 per share, soundly beating Wall Street's even gloomier $0.48 target. Revenue was flat compared to the year-ago period, and right in line with analyst projections.

More importantly, management issued upbeat earnings and revenue guidance for the coming quarter, just like Cisco before it. This is a clean break with the plethora of decent results but terrible forecasts that came out of the enterprise IT sector in recent weeks. Intel (NASDAQ: INTC  ) fell into that trap, as didIBM (NYSE: IBM  ) . Both stocks plunged on the news, and are down more than 10% since then. With these massive bellwethers announcing a cloudy future, what hope was left for sector peers?

NetApp CEO Tom Georgens called the current market "difficult." But customer interest in NetApp's OnTap-branded big data management products and strong sell-through via distribution partners Arrow Electronics (NYSE: ARW  ) and AvNet (NYSE: AVT  ) helped him prosper anyhow (you get by with a little help from your friends).

As for the near future, NetApp presented another $1.5 billion share buyback plan. Georgens saw orders starting slow in the second quarter, but rising throughout. This meshes very well with Cisco's market comments.

So recent business was better than expected, and fears of a coming slowdown have been debunked. NetApp shares jumped as much as 13.5% on the news, pulling arch rival EMC (NYSE: EMC  ) along for a 2% joyride.

There's light at the end of the IT tunnel, and it doesn't look like an oncoming train anymore.

Once a high-flying tech darling, Cisco is now on the radar of value-oriented dividend lovers. Get the low down on the routing juggernaut in The Motley Fool's premium report. Our report also has you covered with a full year of free analyst updates to keep you informed as its story changes, so click here now to read more.

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