Cisco in line for 'Turnaround of the Year' award? Or is it too early?

Talk about a turnaround. Cisco (Nasdaq: CSCO), which just a couple of days ago was setting new 52-week lows on what seemed like a daily basis, today has rebounded some $2.39 (as of late morning) and popped above $16 for the first time since a brief bubble for a few days in July.

What a difference a "not-bad" earnings report makes (see related story).

Cisco yesterday said it earned $1.2 billion, 22 cents per share, in Q4, and had sales of $11.2 billion. Take out the roughly $1 billion in restructuring costs and adjusted earnings came in 2 cents above Wall Streets expectations of 38 cents per share. None of it was ground breaking in any sense, but they were better than analysts expected.

During Cisco's earnings call, CEO John Chambers didn't spend a great deal of time talking about how great a job the company had done in selling its routers and switches during the quarter. Instead, he focused on what the "next Cisco" had to do to keep ahead of its prime competition, HP and Juniper Networks, which have been nipping at its heels and taking share from it in both of its core business segments.

"Since the last quarter's conference call, we've made solid progress on our comprehensive action plan to position ourselves for the next stage of growth and profitability, what we will call the next Cisco," Chambers said. "In terms of Q4 FY 11 overall guidance, we accomplished what we outlined in our Q3 conference call, achieving a little bit more in revenue growth and earnings per share than consensus' expectations."

Chambers said the company had "moved very rapidly" on its plan to simplify and focus its business, reorganizing its sales, engineering, services and operations organization, providing clear line of sight, accountability, and accelerating the speed of decisions.

Chambers also delivered on his vow in May to chop operating expenses by $1 billion; the company will use the savings to fund innovation and "achieve value for our shareholders."

But the normally upbeat exec also used the call to prepare analysts for what he called an uncertain economic environment, one he thinks the company is now in a better position to deal with than some of its competition.

"Many of our peers are now experiencing the same challenges in network capital spending, the public sector and the macro environment," Chambers aid. "We believe the changes that we implemented well ahead of our peers would now be a competitive advantage for us as we go forward in this uncertain macro environment."

And, he said, the company plans more changes through the year.

"It would be very easy to rest upon the changes that we've already made and continue to gradually evolve our company for the future," he said. "That is clearly what we will not do. We will continue to accelerate and drive through the simplification process at an even faster pace. We believe that this is an ongoing process in terms of our simplification goals, not lasting several quarters but several years."

Cisco has been losing share to HP and Juniper Networks, its products have been criticized as being over priced, and its business criticized as being unfocused.

But not everyone had given up on the company, even before its earnings report.

Goldman Sachs analyst Simona Jankowski in July went against the tide, telling customers "Cisco is not a broken franchise." Similarly, Sterne Agee analyst Shaw Wu wrote in a research note that "Cisco's market-share losses have been overestimated."

Whatever the case, the networking giant appears to have at least made enough of an impact yesterday to earn another quarter of support, but perhaps it is too early to start celebrating a "Turnaround of the Year" award. Or not.--Jim