Cisco (CSCO) is a worldwide leader in data-networking equipment and software. And it may be on its way up this year, from the looks of everything. It is amazing how much difference a year makes with a company.
Last year at this time, it was like Cisco was in a boxing match with its competition but was constantly on the ropes. Plagued by poor execution, weak consumer spending, and competition hanging around like vultures just waiting to eat away at its market, the company produced three consecutive quarters of less than stellar outlooks. (click to enlarge)
A year ago sales were down 9% year to year and its main competitors, Hewlett Packard (HPQ) and Juniper (JNPR), were increasing. It started last summer, but Cisco started to make itself over. It cut $1 billion in spending it did not need while on its way to becoming leaner and more focused on what it does well. The results have been astounding for one year. Not only did it meet its cuts early, but followed up with strong results this quarter after a strong second quarter in February.
(click to enlarge)
Revenue in the three months ended in April was just announced. It rose 7%, year over year, to $11.6 billion, yielding EPS of 48 cents. Analysts had been modeling $11.58 billion in revenue and 47 cents EPS. Look how the tails have turned on the other two companies mentioned earlier. Here are analyst projections on earnings the rest of this year:
- Juniper earnings estimates: (6/12 -64.82%); (9/12 -27.75%); (12/12 -41/27%)
- Hewlett Packard estimates: (7/12 -7.03%); (10/12 -17.65%); (12/12 10.19%)
- Cisco estimates: (7/12 23.33%)
Cisco is the company that is on top now and we expect it to continue to move higher. It has momentum while its competitors have nothing outstanding to announce that will move the stock like Cisco will. The company looks a bit bearish presently but we do not expect it to fall much farther. Possibly to 18 but then we would expect it to turn around. If you need a good long term Tech stock to invest in, Cisco is ready for your money!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
