What's going on?

Cisco reported better-than-expected quarterly results earlier this week.

What does this mean?

Cisco is the biggest maker of the hardware that runs the internet and corporate networks, and it provides much of the security technology that companies need to operate day to day. So even though the wider PC industry has been struggling, demand for Cisco�s services has remained in fine form, with no signs of customers cutting back. The company�s �secure, agile networks� segment � which makes up around half the company�s revenue � posted expectation-busting revenue, as did its web conferencing segment. Cisco said it was seeing hints that the chip shortage was easing up too, which suggests it�ll fill more orders going forward. That might be why it thinks revenue will be as much as 4% higher this quarter than the same time last year � a big win considering analysts weren�t expecting any growth at all.

Why should I care?

The bigger picture: Cisco optimizes itself.
Cisco is right to be heady with confidence: there were 15% more orders in the pipeline last quarter than the one before � a key metric that gives investors some idea of future sales. That�s partly down to its hallmark networking equipment, sure, but it�s also down to its forays into new sources of revenue � like selling ways to optimize internet-based services � that have gone from strength to strength in the last year.

Zooming out: From chip shortage to chip oversupply.
Cisco might be finding it easier to get its hands on chips because demand for them has fallen off a cliff lately, as companies get antsier about the prospect of an economic slowdown. That�s caused analysts to slash their estimates of global chip sales growth, even though the US government just passed $52 billion worth of grants for the industry. The situation is so bad, in fact, that chipmaking heavyweights including Intel and Micron have both said they�re planning to cut their spending plans over the next year.