Cisco's (Nasdaq: CSCO) earnings report yesterday is a reflection of the times: Profit is growing once again, but that's due more to cost-cutting efforts and improved efficiency than any real increase in demand.

The networking equipment maker earned $0.08 a share in the first quarter, turning around a year-ago loss of $0.04. Although revenue increased by 9% to $4.9 billion, it has been mostly flat over the past three quarters. But the big news from CEO John Chambers is that sales for the current quarter will be flat, or even lower.

Many pundits were obviously hoping for better news; a headline read, "Chambers Cancels Christmas." He didn't do much to lift the gloom, noting in the conference call that many of Cisco's customers are still having trouble gauging business conditions over the short term.

Still, the company generated nearly $1 billion in cash flow this quarter, and saw improvements in gross margin and market share. "We are well positioned for an upturn," Chambers said, "regardless of when it occurs."

Investors who've watched the stock fall some 85% from its all-time high hope he's right.