I'm not ordinarily one to invest in "high-tech" companies. I don't have an engineering degree. I couldn't tell you which part of a router is the "shooting end" if my life depended on it. But what I can do is basic math, and, fortunately, that's all you need to recognize that Cisco Systems (NASDAQ:CSCO) is a "buy."

Timing is everything
Foolish Duel Master Rick Munarriz picked a propitious date for this duel, the eleventh in our series. For mighty Cisco reported its full fiscal-year 2005 earnings just two weeks ago, and while Wall Street reacted in disgust, know this, dear Fool: Mighty Cisco did not strike out.

Far from it.

Buy the numbers
For those who missed it, the Fool's resident number-crunching expert, Seth Jayson, did an excellent job of writing up Cisco's full-year performance in easy-to-read chart form (a new service from the Motley Fool we're calling "Fool by Numbers"). You can see his work right here. Or you can take my word for it: Cisco did a bang-up job in fiscal 2005.

First, the company grew its revenues by a steady 12.5% year over year. Second, Cisco leveraged those revenues to create outsized profits -- increasing its net margin by 318 basis points and boosting its profits by better than 30% over last year. Finally, through a steady program of buying back its stock to return cash to shareholders, Cisco managed to supercharge its firmwide profits increase and jack up its earnings per diluted share by 40%.


Reading Mr. Chambers' mind
Perhaps you're wondering: "That's fine for the past, but what about the future?" Well, Cisco's management dropped a few hints on that score as well.

Hint No. 1:Cisco's CFO predicted that his company will increase revenues by 10-12% in fiscal 2006.

Hint No. 2: Cisco hired 4,000 new employees in fiscal 2005, with the hiring weighted heavily toward the end of the fiscal year. 35% of those new hires were brought on board in Q4 alone.

Hint No. 3: Cisco more than doubled its capital expenditures in fiscal 2005.

Let's put those three hints together and see what we come up with. For the first time since 2000, Cisco feels confident enough in its future to provide forward guidance a year in advance. Clearly, the company "talks the talk" about a bright future.

It also walks the walk. Cisco laid out copious cash to hire new talent and build its infrastructure, with the bulk of that cash being invested in the past few months -- the best vantage point from which to view the coming fiscal 2006.

Put it all together now. Cisco believes it has a bright future. It believes that strongly enough to go out on a limb for the first time in five years and put hard numbers on that future, strongly enough to take on long-term commitments to new employees, strongly enough to double down on its investments in order to meet its future head-on and capitalize on its opportunities.

Wall Street doesn't take the hint(s)
Wall Street totally missed the clues that Cisco laid down. The professional analyst community saw Cisco meet expectations for the quarter and immediately threw a hissy fit over the fact that Cisco didn't beat expectations. So they sold Cisco off by 7%.

Basic math
Not only did the analysts miss the clues to Cisco's future. They also apparently cannot do basic math. Last year, Cisco generated $6 billion in free cash flow despite the aforementioned massive reinvestments in its business. Before Wall Street blundered and sold Cisco off, the company sported a market cap of $125 billion, giving Cisco a price-to-free cash flow (P/FCF) ratio of 21 -- about a 14% premium to the market at large.

Today, Cisco's market cap is just $114 billion, and its P/FCF ratio has fallen to just 19 -- roughly equivalent to the market's valuation. Subtract out Cisco's $7 billion cash hoard, and the company's actually trading at a discount to the market.

A cheaper-than-average tech heavyweight with far better-than-average prospects? That's a buy in my book.

You're not done. This is just one part of a four-part Duel! Don't miss Chuck Saletta's bearish argument and rebuttal or Rich's bullish rebuttal. When you're done, you're still not done. You can vote and let us know who you think won this Duel.

Fool contributor Rich Smith does not own shares of Cisco. If he did, The Motley Fool would require him to tell you so. We're sticklers about stuff like that.