Earnings Preview: Cisco Systems

Cisco Systems (CSCO) is expected to report Q1 earnings after market close Wednesday, Nov. 5,  with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is 39c for EPS and $10.30B for revenue, according to First Call. Cisco had projected sales growth of 8% YoY, which implies $10.7B.

Analyst Views

During the quarter and into last week, analysts hustled to cut numbers on Cisco, ahead of of the earnings report. With its sales tied to the investment cycles of large corporate and telecom customers, Cisco is expected to report a pronounced weakness for the quarter. Despite the lower earnings, many analysts still see Cisco as a reasonably solid bet in a downturn, given its wide portfolio and market leadership in Internet routers.

Bernstein believes Cisco will report in-line results, but reduce its guidance significantly for the rest of its FY09, due to the caution of its customers. However, Bernstein thinks Cisco's balance sheet is strong and maintained their Outperform rating.

Deutsche Bank expects Cisco to post 1Q09 revenue that is in-line to modestly below its estimate of $10.32B. The firm said weak booking trends in Sept. and Oct., could be partially offset by seasonally strong government sales with the Sept. fiscal year-end budget flush, unusually strong backlog entering Q1 and relative stability in the carrier biz. With that said, Deutsche does believe that Q2 Street revenue estimates will be revised downward as management will likely guide to November biz trends that are weak. Despite any near-term weakness, Deutsche views the shares as having an attractive valuation and should remain a long-term holding for investors.

On the bookings front, Stifel recently commented after their checks showed that Cisco was stretched in the back half of Q1. Stifel's checks with resellers showed that bookings for most fell 7% to 10% below plan. As such, Stifel believes that even its recently reduced 7% YoY growth estimate for the Q2 January quarter might be too optimistic. The firm's new model now assumes 4.8% YoY growth for Q2, flat sequentially. Stifel warns that two incremental areas of concern are emerging markets and the commercial segment, in light of the global economic downturn.

Comments

[frs:]

Cisco may well remain amazingly strong - we'll have to see. Other than Stifel, who actually tried to assemble some data, the rest of these 'analysts' do nothing more than just take guesses and hope for some accuracy. It's safer these days to completley igonore the wall street boys.

2008 Nov 05 02:31 PM

[Gumby:]

Pardon me for being off the point or the story above.. but , but it is a must reading here..

Our govt can offer a somewhat bigger bailout or loan to GM and Ford with one condition.. GM and Ford must stop offering any discounts or rebates on gas guzzlers and instead offer rebates on fuel efficient models.. It was always more of a energy crisis than a financial crisis , but we are tired of caling it such so we cover or whitewash our economic problem with a financial name or label... It was always the oil shortage and rising oil prices that keep on messing up our economy..
Big Oil is getting much bigger than ever and it is much harder to unload Big Oil stocks. Our capital is increasingly tied up with Big Oil. Our only solution is to discourage unnecessary purchases of gas guzzlers like pickups and SUVs and muscle cars..Anybody who thinks he really need it would have no choice but to pay the MSRP for it... We are still not selling enough fuel efficient cars to help with our projections of future oil demands that is supposed to fall along with accompanying gasoline prices for much longer terms..
GM and Ford can then turn around and argue with UAW that they have no choice but to make fuel efficient cars profitable at any costs.
I dont anticipate any increase in gas guzzler production for the foreseeable future if ever again.. It will keep on falling toward the real levels of demand by users who really need them for hauling stuff.. PickUps are not even intended for just commuting to work and back home.. at all.. even as company pickups.. PickUps are intended to be left at workplaces, farms, ranches etc.. Workers has no choice but to start commuting in fuel efficient models.
GM and Ford should start building fuel efficient models especially for Big & Tall Men and Women included.. Those biggies no longer can enjoy the excuse for continuing to drive pickups ...
America got to own up to the fact that many of us are still resisting fuel efficient models regardlessly.. We have no choice but to confront those energy bigots at once!!

2008 Nov 05 03:02 PM

[BerkeleyBob:]

You are correct on one thing--your post was off topic. Please don't let this website degenerate into the Yahoo finance company boards!

2008 Nov 06 11:34 AM