Analysts take Cisco's results in stride; Chambers touts enterprise pipeline

With a fair amount of bad news priced in, Cisco (CSCO -4.3%) hasn't caught any downgrades after providing soft order data to go with an FQ2 beat, dividend hike, and in-line guidance, and has only seen one PT change - MKM has cut its target to $20 from $24.

Some analysts are a little worried about Cisco's margins. Though FQ2's gross margin (61.3%) was in-line with a 61%-62% guidance range, Goldman states it was below a 61.9% consensus. The firm also points out product GM (hurt by declining sales) fell 210 bps Y/Y.

CFO Frank Calderoni mentioned on the CC (transcript) FQ2 price pressure was at the high end of Cisco's historical range. Goldman sees margins rebounding in 2H14 as volumes recover, but is also keeping an eye on whether "discounting pressure mounts as large cloud customers become a larger percentage of the mix."

John Chambers defends his company in part by asserting Cisco's enterprise deal pipeline is up over 20%, and its pipeline of $1M+ enterprise deals is up 30%. A pickup in signings of "architectural" deals covering a diverse array of products is said to be responsible.

Cisco's enterprise orders fell 2% Y/Y in FQ2, a more moderate drop than the 12% decline seen in carrier orders.

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