Once the highest flying of all the Net stocks, and one of the hardest hit in dot-com bust, Cisco and its CEO, John Chambers, finally began feeling the love again from Wall Street in 2006. And for good reason. For years investors doubted Chambers’ vow that the networking giant could maintain double-digit growth without sacrificing its luxuriant profit margins. But in 2006, Cisco enjoyed 16% growth, while coming in just shy of that historic 20% net income mark—despite integrating operations of far less profitable Scientific Atlanta, the cable set-top box maker it bought in late 2005. That’s a testament to a crisp execution from one of tech’s deepest management teams and text-book balancing of operational and strategic goals. While most big tech firms struggle to succeed outside of their core market—think Intel in processors—Cisco is positioned to cash in on a host of megatrends, from Voice-Over-IP telephone calling to Internet video. The result: Cisco’s stock delivered investors a 28.2% return for the year.
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