One question stands out from the Cisco conference call this evening:
QUESTION: Is your confidence increasing that customers’ network utilization rates are high and that CEOs are planning for more than one quarter at a time, implying continued order linearity and visibility?
ANSWER (Chambers): They are getting their foot, perhaps, off the brake. Some of them are starting on the gas pedal. But very few are doing what Cisco is doing, which is putting the gas pedal all the way down. So I do not think that you can call it linearity in terms of their decision to spend yet, and I think that’s what the (chief information officers) would say in our meetings. And only about half the CEOs would even be saying we are comfortably into an economic recovery.”
The overall market appeared to spike in the afterhours market upon seeing Cisco’s numbers, but these comments certainly confirm that the recovery is lumpy at best and certainly not broad based.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.