Hasnt been apple or intel or microsoft. Maybe cisco is the one to take us to new highs. The leader today which was positive, amazon, comcast, our parent 100 now and facebook, so, you know, its the new technologies that are leading the way here. Facebook had a nice turnaround after they came out and said they sold apple and buying this one. A big move late in the day but the nasdaq has been positive all day and think that could be the new leader to take us to new highs. Going well off the lows of the day, the dow down 38 points, the s p and nasdaq positive. Stand by for the very important cisco earnings on the second hour of the closing well with maria. See you tomorrow. And it is 4 00 on wall street. Do you know where your money is . Hi, everybody, welcome to the closing bell. Im Maria Bartiromo on the floor of the new york stock exchange. A mixed day for the market. The dow failing to hold on to 14,000 level with the decline of 36 points off the worst levels, even there, as you can see there, a decline of 37 points. Take a look at how were finishing the day overall. A reversal of yesterdays decline and the s p 500 finishing in the green by just a fraction. Just moments away from ciscos Quarterly Earnings report but first lets get to the market. Joining me right now is rod smith from river front Investment Group and Quint Tetreault from tetreault capital and chris lehman and our very own rick santelli. Thanks for joining us. I havent seen you in a while. Glad youre back with you putting money back to work in this market. Are you . Its interesting. You come back at the end of the new year and that i of what your strategy will be. As Value Investors were looking at new stocks and amazing to look at the valuation of the s p 500 which is a pretty good proxy for the whole market. The pe on the market is 12 times and 11 times next year. Corporate profits are growing at roughly 10 , and i think what Retail Investors are doing and Institutional Investors who might be running a little too much cash in their funds are saying ive got to be involved in the market, market is just too cheap and as boshds sell off that may be an indicator the economy may be reflating and well have steady growth for another year. A lot of people want to throw darts at the market and criticize the fact that weve seen such a big comeback and sustained rally and yet valuations are pretty good. Yes, thats also the case, and i work very much with the retail world, maria, and the question i get all the time is people who have held cash because they were worrying about the fiscal cliff, they were worrying about whats going on in washington, saying are they too late or have they missed it . And the point i always try to make to them is particularly in this current environment is that if you are an owner of cash, not for the short term, if youve got a bill that you need to pay in three or four month, cash is the right place for you, but if you have your longer term money in cash, youre lose 2 00 to inflation every year. Weve had a lost decade for cash already. Youve lost 8 of purchasing power in the last ten years, and were having to have another lost decade for cash Going Forward so time horizon is very important. I guess, i mean, one issue though would be am i going to be able to get into this market at lower levels, Quint Tetreault, so whats your feeling on that . Yes, i mean, i get it that valuations are attractive. I get it that there are very few alternatives out there given where rates are, but are there still enough cat lifts that are going to be a problem that send this market lower and enable me to get into better prices . I think i think there is, maria. Im sorry. Sure. I think there is, maria. Weve seen it. The last several years, weve seen this pattern repeat itself. Start out beginning of the year very hot. Last year we had a 10 run. Gave 8 of it back and presented another opportunity when i was with you in chicago in november when everybody was panic selling. A good opportunity. I think the key is investors, theres no question, ill tell you whats moving this market higher, and our guests alluded to it. Its anxiety. Its fear of missing the boat, and the bottom line is people have to look back over the several years that weve had in this incredible run in the market. After the market has had a 10 to 15 run off the bottoms over the last five years has been historically a terrible time to put money to work. Now, we have a retracement which i think we will. Im looking for an 8 decline to the s p 1400 mark. Thats going to be a level that i think new deals, new opportunities will prevent themselves. Whether its the sequestration, whether north korea shoots, you know, something off, i dont know what the catalyst will be, but we are stretched and putting money to work here is very dangerous in my opinion. You dont agree with that, you said that. That would have been my philosophy maybe a year ago, but what i think youre going to see, the market is up 7 . As soon as you see a 2 , 3 pullback, so many cheick cheap stocks, people want to get ahead of the 8 pullback. I would dollar cost average into the market right now. The thing is theres such a buy on the dip mentality. Yes. That even when we do see big declines they are followed by the buy on the dip. Rick santelli you see that as well, even though youre not buying into that idea that this new money is coming from the bond market. No, because theres plenty of other money out there that doesnt need to be in the marketplace to get these type of equity returns, and the one guest said, you know, its fear that they are going to miss the boat. Thats not what i hear every day from many people. I hear its fear that the stock market is going to turn into an apple stock, where one day it looks great, nobody says a bad thing about it, and then, boom, a huge amount of value is shaved off. We live in a world where the average guy doesnt see the economy in the stock market jiving, and they dont look at it as they are not making any money. They are risk averse. Missed opportunities perceive differently with many on the retail level. I couldnt agree with that more, if you have time for a comment. Yes, please. I couldnt agree with rick more. The retail crowd is afraid of the apple moment, they are afeed of the lehman moment, but classically a bull market in its early stages climbs a wall of worry. Yeah. And all you need for stocks to be able to go up is for the worst outcome not to happen. You saw that exactly. People say, well, washington didnt really do that much, well the answer was we didnt have the worst out come. Got to get to the numbers. Cisco is out. Its better than expected at 51 cents a share. Want to get right to jon fortt who hats results. Jon, what can you tell us . Maria, as you mentioned, revenue came in at 12. 1 billion, just about in line with expectations. Maybe a little better. Eps 51 cents a share nongap. The street was looking for 48. Also ill mention net income at 3. 1 billion. The street was looking for around 2. 54, i think, so overall, i havent calculated the nongap gross margin number. This is very good numbers on the margin front which was the number to watch for. I expect some people will be happy with this. Weve got a stock obviously that is moving on these numbers. Lets break down the numbers. The Senior Research analyst with jmp securities. Eric, you heard the numbers, talking about 51 cents a share on 12. 1 billion. Whats your reaction to that . Encouraging to see strong earnings upside. I think the revenue is going to be a bit more of a focus for the broader investment community, but the earnings is encouraging certainly. The earnings are encouraging. What do you want to hear from John Chambers when he speaks . Well, its going its really going to come down to what the outlook is for the top line growth. Cisco has been struggling to generate the Revenue Growth for some time. They have been in very good control of their margins for a while so i think theres good confidence on the earnings front. Its going to be what what steps is he taking to accelerate that top line . In terms of growth, where does the growth come from in your view at sysco in the coming couple of quarters and years . Cisco is repositioning itself. Its becoming it wants to be the number one i. T. Company, and that means that they will be expanding just beyond communications. The usc server platform is a great example of how they have expanded, but its going to take some additional products and directions for them to become a much broader provider, and that will drive the top line. Bottom line here. Would you commit new capital to cisco at 2119 . Were at a market perform. I think its a fair value, but i was encouraged. All right. Well leave it there. Thanks very much. Just heard the numbers on cisco. Appreciate your time tonight, by the way. Thank you. Lets talk with the man in charge to find out where the growth does come from. John chambers joins me now, exclusively the ceo from krisk oerg. Nice as always to see you. Its a pleasure and thank you for the very kind words. Lets talk about the quarter that was and talk with b where the growth comes from Going Forward what. Drove this last quarter, john . How would you characterize things . Well, id characterize things that it was another quarter thats proof point was our vision and strategy is working, and where weve been putting our resources to work are getting the results. We did exactly what we told the market wed do. 47 to 48 cents, we did 51. We said growth in the 3. 5 to 5 range, we did 5, and this is in a market that many of our peers are seeing flat growth or negative and i think you alluded to it earlier, very, very comfortable with our Gross Margins which, maria, one to two years ago, the people listening to your show were most concerned about. In terms of where the growth will go in the future, were watching key market transitions. The cloud is one of those with switching and routing and servers and storage coming together. That market was very hot for us this quarter. The second area is mobility. Almost every application you hear about are people acquiring stuff with Service Providers and enterprise and we have an architecture there that is really, really great and the security that reloads the networks. The last time we were together you talked about the softness in europe, the i. T. Market in europe is softened. Some of your big customers are governments on every level. How did cisco avoid the financial struggle of those marketplaces this last quarter . Talk to us about government and europe which were the two soft spots. Sure. Well, maria, i wish i could tell you we avoided them. What we did is those are clearly negative drives on the growth. Our Growth Numbers were extremely good. If you look at europe we are starting to see potentially early signs of improvement there, but i wouldnt think of europe as one europe. Think of it as germany, northern europe, uk, central europe, Southern Europe and eastern. The northern and uk europe are actually showing early signs of turning the right way. Southern europe is really going to be challenged for a while so it was mixed in europe. We did start to see government, however, around the world loosen up the Purse Strings a little bit. Nothing to write home about but in the u. S. , for example, state and local governments grew for us and federal was not down year over year as weve seen in prior quarts. Do you have any clarity on what this tells you in terms of the next couple of quarters on Government Spending . Not in terms of Government Spending, maria. It does tell you if governments are going to deliver increased services to their customers they have to spend on i. T. Most government leaders do the exact wrong thing. They basically try to hold on to all the employees and dont right size the organization and then use i. T. To provide Better Health care, education, security to their citizens. That usually takes a period of time, but for your state and local government, first resisted spinning i. T. , perhaps ten months ago and its picked up at a healthy growth rate of 7 . John, let me switch gears for a moment because you and many of your colleagues in business seem to be faced with this embarrassment of riches, and that is sitting on a lot of cash in terms of giving you great flexibility in terms of what to do with that money. With 45 billion on the balance sheet, whats the plan . The plans are, first of all, were going to give at least half of our cash generated from operations which this quarter was above 3 billion again to our shareholders, either in the form of dividends or share buybacks. Secondly, our accusations allowed us not to be a router company. We acquired into switching and data center and mobile and in a Search Market and wherever we acquire is where our head count growth is going to be. If the majority of our money remains outside the u. S. , and this depends on tax policies, thats where youll see us acquire Going Forward. Thats, unfortunately, where our growth will occurch weve done 14 accusations in the last year or so much. Majority of those dollars have been outside the u. S. I would like to see that policy change, but were assuming it may not, and, therefore, well put our shareholders money to good use so we can get them the returns. Thats the issue. Everybody is talking about that. Taxes. Last november, i guess, november last year rather, you said u. S. Taxes on corporate profits were too high. Its threatening jobs. Its actually sending jobs and growth to canada so you heard the president last night. You know what happened at the end of the year on the fiscal cliff. Do you have any encouragement that youre going to see this tax situation change, or are you and your colleagues in business going to keep all that money overseas . Well, maria, i think i can just speak for myself and not my colleagues. Well put the money to use, one location or another to have it in the u. S. What i liked about the president s comments last night is focusing about accelerating the growth of this country in jobs, focused on immigration, focus on common trade pacts with europe and across the pacific and you did see this earlier starting to get active in acquisitions which is where our future growth will be. Tax polley will determine where our growth and head count will be. Im a very loyal american citizen and company, but in terms of future growth, unless tax policy changes, you will see that occur outside the u. S. How do you see cisco different in the next couple of years. Youre touching on accusations. How do you see this company changing in terms of where the potential for expansion that is acquisitions might be . Sure. Its a Great Questions maria. If you look we have a chance to move from being the number one Communication Company which i think most of your viewers would agree were there to the top i. T. Company and as we do that our roll in data center, our role in helping Business Solutions is our forefront. Theres a concept called connecting the next internet of everything which means 99 of the devices around the world which can be connected are not, and as you do that that will change Business Models and held care and education. Our goal is to lead in that starting with areas like start grid and start connected communities. The third element were looking at is the network is very intelligent and you wont know where processes are or service or software resides. Well think about an Application CenterNetworks Networks that are program kabl so those are three big bets for the future that might go beyond what some of your viewers are traditionally thinking about cisco. We were talking moments ago with the chairman of the intelligence community, and he was telling us banks, for example, are hacked or attempts to hack them happen 300,000 times a day. It seems to me that nothing is growing as fast as data. We all know that. Data has to be organized, secured. How big of an issue is this from your standpoint in terms of security of information, john . Its huge, maria, and if i may draw a parallel. Were winning most new opportunities for something they call the smart grid. Its really how you will put electricity moving over the internet, and today there are 360 different protocols out there which means no one spends a lot of time trying to hack it. As you move to ip, security becomes one of the issues. Otherwise could you turn off the lights. If we execute right, we can put security from the cloud to every element of the network to every device so its a very big issue. One that if we execute right over the next two to three years should be a very good Growth Market for us as well. Real quick, john. What kind of a 2013 are you expecting . I think what our customers are telling susa very slow start and just steady improvement throughout year. Im assuming that that means that europe, that we dont have any major disasters there and that governments do not misexecute too badly. I think were all anticipating a few bumps but if government executes that and causes us to pause for a while but the trend is up to the right and a much slower pace than all of us would like to see. Leave it there. Good to have you on the program. Know youll be talking now with analysts and continuing your earnings commentary so well leave it there. We appreciate your time tonight, john. As always, maria. A lot of fun. Thank you. Well see you soon. John chambers, ceo at cisco. Coming up, the latest on mark zurk bckerberzuckerbergs that hes holding tonight for new jersey governor chris kreefty and the Carnival Cruise ship being towed back to port and different stories of how bad conditions are on that ship. More on that coming up. Stay with us. With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason