- With shares having badly underperformed the Nasdaq since August due to earnings disappointments (I, II), expectations for Cisco (CSCO +0.4%) are fairly low going into today's FQ2 report. Thanks to emerging markets, set-top, and carrier router weakness, analysts collectively forecast Cisco will see an 8.8% Y/Y revenue drop in FQ2, and a 7.1% drop in FQ3.
- Stifel's checks indicate Juniper (JNPR - Q4 service provider sales +12% Y/Y) is taking carrier router share from Cisco. The firm is also worried many Cisco customers are holding off on data center switch purchases as they evaluate its new Insieme/ACI SDN platform.
- Insieme has received a mixed early reception, with some praising its innovative (software-driven) feature set and others deeming too costly/complex relative to SDN/networking virtualization alternatives that can leverage commodity hardware. VMware's (VMW) NSX platform is arguably its biggest rival on this front.
- Though admitting Cisco faces a slew of near-term challenges, Cantor remains upbeat about the potential of new products, including Insieme/ACI and Cisco's NCS carrier routers, to provide a lift in FY15 (ends July '15).
- UBS, while reiterating a Buy, thinks a long-term battle for data center supremacy is getting underway between Cisco and VMware, one whose outcome is far from certain.