Mark Cash: Cisco reported second-quarter earnings last night, with results that were in line with our expectations as the company grew 5% year per year. As we look forward, we believe Cisco will be able to sustain its growth rate, and we have raised our fair value to $49 per share from $46. We like that Cisco is gaining momentum in high-growth areas like software-defined networking and security for cloud-based environments.
We think that Cisco is becoming less reliant on a hardware refresh cycle as it grows its software-based sales and recurring revenue streams. In addition, Cisco announced $6.5 billion will return to shareholders in the quarter through buybacks and dividends. The company also announced a 6% increase to its dividend, raising the yield to 3%, and still has $24 billion to return to shareholders.