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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Austin Smith has no positions in the stocks mentioned above. Eric Bleeker owns shares of Cisco Systems and EMC. The Motley Fool owns shares of EMC and F5 Networks. Motley Fool newsletter services recommend F5 Networks. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.