Monitoring Cisco Into Earnings (CSCO)

| About: Cisco Systems, (CSCO)

'Slash' submits: Cisco (NASDAQ:CSCO) is expected to report today, Tuesday (Feb. 7th), after the market close. Recent chatter has been that month-of-January bookings had slowed down -- driving the stock down from recent high of $19.43 to $17.95 (closing at $18.15).

From what I can gather it seems as though the quarter did have a decent close, as decent as you can get in January given that most customers are not running to order a bunch of stuff early in the year. I do not think the quarter was off the charts for all product groups, but selective groups did have a good showing. The area to focus on remains the advanced technologies group, as this is where growth should come from longer-term.

Given January seasonality and the "low billings hurdle", the book-to-bill should be greater than 1, which means that down the road revenue growth should pick up (think July/Oct). The earnings report should be as expected, with possibly higher than expected EPS, given strong repurchase of stock and cost controls.

CSCO stock has been a tough name to own no doubt, as it has moved down for the past 5 of 6 months. CSCO needs to guide revenue growth to 10-12% Y/Y growth on the top line and at the same time manage gross margins/expenses given the company's recent acquisition of Scientific Atlanta that will be folded in soon.

Given that most Wall Street estimates will not change dramatically after the company reports, it's still tough to own CSCO into earnings, given that the risk/reward at these levels is pretty neutral and CSCO is the "high expectations/high multiple" name that JNPR was (prior to its healthy-haircut).

CSCO 1-yr chart:

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