After what some in Silicon Valley have been calling a ” Cisco Lock Down” – term used to describe the rabid focus to reduce expenses, travel restrictions to visit customers, systematic layoff of employees, and countless of restructuring, Cisco is getting a bounce with their latest earnings report – thanks to good operations and sales.

Cisco (CSCO) reported its second quarter results for the period ended January 23, 2010. Cisco reported second quarter net sales of $9.8 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.9 billion or $0.32 per share, and non-GAAP net income of $2.3 billion or $0.40 per share. This on the heals of a Juniper Networks (JNPR) who announced encouraging results for the QE Dec09.

Here is John Chambers money quote:

“We are confident that our aggressive strategy of investing in the business during the downturn and our focus on innovation, operational excellence, and productivity are driving our momentum and growth in the market”.

I am very skeptical on Cisco’s product leadership and innovation results. In Chamber’s carefully worded quote above where he says “that Cisco has been investing in the business”. This funny.

The investment prism has a few different perspectives. Cisco’s perspective of investing in the business has been to cut every expense to stop the drag over the past few years and bought companies where they have had zero product leadership. I guess that’s good business for Cisco – go slow during the downturn and put on the speed when there is an upswing – especially when they declare we are in an upswing.

Personally, I like the Apple model of executing in a downturn – make kick ass products.

Good news is that Cisco is a big fully diverse company one that puts a premium on operational efficiency. Their primary focus is sales operations and expense management – not so much on product and platform.

Cisco’s lack of product leadership in their key under invested areas will be great news for startups and other companies looking to be acquired – just like Starent and Tandberg. The operational challenge of course will be Cisco’s continued challenge to do product integration. That being said Cisco sales machine is still very strong.