Through this earnings season, stocks and emotions have fluctuated on technology companies' complaints about softening orders from customers worried about geopolitical turmoil and a slowdown in the data center equipment market.
Cisco Systems Inc.
though, just works fine.
The network giant, seen among some investors as a barometer of the technical ecosystem and the global market, reported strong earnings on Wednesday afternoon which pushed stocks higher. That stock is almost doubled, but after CEO Chuck Robbins commented heavily on macroeconomic uncertainty in a conference call that believed all the doubts in the report.
"I have been surprised by the resistance we have seen around the world in light of all the macro environment and the geopolitical dynamics, whether it is a closure, or it is trade with the United States and China, or it is Brexit, or there is stress in Italy, or there is political unrest in some emerging countries, says Robbins.
"I have not seen any general difference in the last 90 days of the discussions we have had, except talking to a customer which has very high exposure to the Chinese market. But even then, they are talking about the impact of the geopolitical situation, but they never associate it with any form of expense change, Robbins continued. "Some of them can do that, but I don't have these calls. Everyone seems to be moving in the same place they were three, six months ago."
See also: 20 companies with zoom sales and Fat margins that can drive their stocks
After-hours gains of slightly more than 2% shot at more than 4% after Robbins made those comments. In a later interview with MarketWatch, CFO Kelly Kramer said there was a "sigh of relief" from investors who were concerned that the negative headlines also affected Cisco.
"People assumed we would struggle more because of the geopolitical environment," she said.
Beyond concerns about spending in China and financial turmoil, the major concern in technology is a potential slowdown in cloud buildout, when chip companies have reported While Kramer admitted that Cisco's data center server sales declined from last year, she discovered that other products, such as switches and routers, were selling to the cloud market, doing well and server sales increased in America, Ciscos biggest market for that product.
Robbins joked that it was suddenly a good thing that Cisco did not have so much exposure to the cloud market, however, Kramer was more specific and credited Cisco's broad customer base and noted that many of the companies that beat , focusing on just one end of the market, especially the big shooting companies like Amazon.com Inc.
AMZN, [0.1459006] + 0.12% Microsoft Corp.
and Alphabet Inc.
GOOGL, + 0.09%
in the United States and Alibaba Group Holding Ltd.
BABA, + 0.41%
and others in China.
Opinion: Nvidia is the last sign that the cloud boom dies
"The data center market is not just the scales," Kramer said, adding that "the growth in their spending seems to be slow."
] The color and figures from Cisco indicate that the company has the benefits of having customers across industries ranging from small to huge, as well as a business that can require customers to spend a lot of time completely transforming their technical infrastructure. Managers are not worried about the future, nor are they projecting that revenue and revenue for the current quarter will grow faster than Wall Street is expected.
If the geopolitical environment and the cloud's decline appeared to Cisco, it would have been a major distress signal. Instead, Cisco's income report shows that it remains good at this time of technical discomfort, which will reassure Wall Street's nerves – for now, at least.
Do you want this kind of analysis sent to your inbox? Subscribe to MarketWatch's free MarketWatch First Takes newsletter. Register here.