Cisco Systems (CSCO, $23.52, up $0.87), the king of beating earnings by a penny, did just that when it reported earnings yesterday after the closing bell. For the quarter, the company reported profits of $2 billion, or $0.33 a share, compared with a profit of $1.9 billion, or $0.31 a share for the year-earlier period. Adjusted earnings were actually $0.40 a share which beat analysts expectations of $0.39 a share. Revenue came in at $10.4 billion, up from $9.4 billion a year ago, and slightly ahead of the $10.3 billion analysts were expecting.

About a month ago, Cisco shares tumbled 5% after the company’s CEO said he didn’t expect the pressure from an economic downturn to let up until early 2009. This, after saying he expected things to ease later this year. When the updated “forecast” was mentioned Cisco had closed at $22.88 the day before and fell to $21.58 following the news. Today’s push puts us right back at those levels although Cisco was trading above $24 in pre-market trading. The point is, despite the good earnings news, the stock is basically flat from where it was a month ago despite Cisco reporting its first $10 billion quarter.

There appears to be strength in the stock because Wall Street overlooked the fact that the company guided revenue for the current quarter a little lower. Cisco said revenues will grow by 8% from a year ago, which puts revenue at $10.3 billion. Wall Street had been expecting revenue of $10.4 billion. For the following quarter, which ends in January, Cisco predicted revenue growth of 8.5%, which comes out to $10.7 billion. The Street had been looking for $10.8 billion.

Cisco is a solid company and their CEO is one of the best in the business. However, when it comes to taking an option position I’d rather look elsewhere.

Rick Rouse