"CSCO's performance tells us how well the legions of customers who purchase products across the IT and networking spectrum are doing.

"We recently forecast that Cisco would deliver fiscal Q3 results on the positive side of the Street's expectations, and that its outlook would be either upbeat or, at least, encouraging. We weren't disappointed.

"For the first time in many quarters, Cisco said that its customers are describing their business momentum differently. Those customers are seeing some stabilization and are finally beginning to see some reasonably solid sales results.

"Bookings growth was down by more than 20% for the quarter, year-over-year, as the industry continued to experience broad-based weakness.

"But, what's important is that bookings growth on an annual basis stayed consistent throughout the quarter -- the first time that's happened in awhile.

"It's a sign that conditions could be stabilizing and that Cisco may have found a floor. What it doesn't mean is that things are going to improve in a hurry.

"With orders declining by more than 20% in the aggregate -- and (excluding the public sector) by roughly 20% to more than 30% in each of CSCO's customer segments and geographic regions -- there is still a ways to go before the company can claim a turnaround.

"For the quarter, CSCO reported EPS of 30 cents, excluding non-recurring items -- 5 cents better than the consensus. The results were attributed to strong gross margins and impressive reductions in operating expenses.

"And, while revenues fell 16.6% year-over-year to $8.16 billion versus the $8.07 billion consensus, what's important is that Cisco's war-chest cash rose to nearly $34 billion at the end of the quarter. That compares to $26.2 billion at the end of fiscal 2008 and $29.5 billion at the end of fiscal Q2 2009.

"Through this difficult period, CSCO has done a good job at controlling costs and staying focused on longer-term opportunities that will become concrete once the economic recovery really kicks in.

"Cisco is a stock that should be in your stable before the economy shifts into a higher gear. If you don't already own it then accumulate shares aggressively on pullbacks."

Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.