It was just yesterday that we named Cisco Systems, Inc. (NASDAQ: CSCO) as a company that might regain its mega-cap status by getting a market cap back above $100 billion.  If the reaction right after its earnings report holds up on Thursday, Cisco will have that mega-cap status all over again.

We noted in our preview that the problems at Cisco were numerous but also well-known.  The bar had been set lower and lower by analysts ahead of the report.  After the close cam Cisco’s report that revenues rose about 5% to $10.9 billion and that non-GAAP earnings came in at $0.42 EPS.

John Chambers noted that the quarter played out as expected.  The company has acknowledged its challenges and it knows what has to be done and has a clear game plan. 

Gross margin looks to be about 61%. Its inventory turns also crept back up to 11.1 from 10.6 previously shown.  Its ‘Days sales outstanding’ were 37 days, down from 40 days in the prior quarter and down from 39 days a year earlier.

Cash flows from operations was up to $3 billion from $2.6 billion a quarter earlier.  The cash and cash equivalents was a whopping $43.4 billion.  It has paid a $0.06 dividend, but the company is still throwing good money at bad money by repurchasing its shares.  The company repurchased some 54 million shares in the last quarter for about $1 billion (or $18.39 on average).  

One caveat has to be thrown out here.  Until guidance is given, investors are somewhat flying blind.  If the guidance is awful or if John Chambers comes across as apologetic and nervous, then some of the gains may fade.  Still, the bar was already set very low.

Cisco shares closed down $0.01 at $17.78 today and the 52-week range is $16.52 to $26.80.  The after-hours market reaction before the conference call has Cisco shares back up around $18.45.

• UPDATE 5:30 PM EST: Cisco shares have softened and given back the gains of earlier.  The conference call did note that its fourth quarter would remain challenging and the guidance was lowered to $0.37 to $0.39 EPS versus $0.42 EPS consensus from Thomson Reuters.  The market also reacted negatively to the announcement of job cuts coming by the end of summer, but we already warned you ahead of time that this was to be expected.  We now have shares down about 2% rather than up and the after-hours prints are down around $17.45 on more than 23 million shares in the after-hours session alone.

 JON C. OGG

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