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Why Cisco Systems Shares Jumped Today

By Evan Niu, CFA - Feb 11, 2016 at 3:15PM

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The networking bellwether holds up despite a tough macroeconomic environment.

What: Shares of networking specialist Cisco Systems (CSCO -0.41%) have jumped today, up by 10% as of 2:48 p.m. ET, after the company reported strong earnings results.

So what: Revenue in the fiscal second quarter totaled $11.9 billion, topping the Street's expectations of $11.8 billion. Profitability also came in better than expected, with adjusted earnings per share of $0.57, ahead of the consensus estimate of $0.54 per share. There's been a lot of investor pessimism related to stocks exposed to enterprise tech spending, so investors may be relieved to hear the good news.

Now what: CEO Chuck Robbins said the company was able to manage its business well within the context of a "challenging macro environment." The core switching segment saw revenue fall 4% to $3.5 billion, but other segments like security and video grew to offset some of the declines. Cisco is also exercising cost discipline and preserving the bottom line, and the company boosted investor confidence by also increasing its quarterly dividend to $0.26 per share. Cisco's board also approved a $15 billion increase to its share repurchase program.

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