Seeking Alpha

Cisco's EPS guidance in-line, but orders remain under pressure

  • Cisco (CSCO) guides on its CC for FQ3 EPS of $0.47-$0.49, in-line with a $0.46 consensus. The company also reiterates FY14 EPS guidance of $1.95-$2.05 (consensus is at $1.98).
  • However, the networking giant adds its orders fell 4% Y/Y for the second quarter in a row. The main culprits: Switch orders fell 6%, router orders 5%, and (thanks to plunging set-top sales) service provider video orders 20%.
  • Switch sales (39% of product revenue) fell 12% Y/Y in FQ2, and router sales (21% of product revenue) fell 11%. SP video fell 22%, and collaboration (videoconferencing, WebEx) 7%; the latter could be a negative for Polycom (PLCM).
  • Data center (UCS server) revenue only rose 10% after growing 44% in FQ1. However, Cisco asserts orders growth was in the mid-30s range. Wireless (dominated by Wi-Fi), another growth area in recent quarters, fell 4%. Aruba (ARUN) -2% AH in response.
  • Americas orders -5%, EMEA -2%, Asia-Pac -5%. Enterprise -2%, SMBs and public sector +1% each.
  • CSCO now -3.8% AH.
  • More on Cisco
Comments (13)
  • John failed to chamber the next round.
    12 Feb, 05:33 PM Reply Like
  • I didnt want to hold much CSCO into this quarters results. However I got a much better sense this quarter and actually may buy more tomorrow.

     

    John Chambers is a CEO I tend to believe and he shared how CSCO is approaching the Internet of Everything. He gave an example of Digital Israel. How the Network model is collapsing from 7 layers to 3 layers etc.
    My conclusion is to begin building a larger position.
    12 Feb, 05:45 PM Reply Like
  • The position you begin building should be to stop listening to John Chambers and never trust anything he says.
    12 Feb, 06:02 PM Reply Like
  • I suggest you check the chart of Cisco over the last 14 years. Then remember that John Chambers has been touting how his company has been "approaching the Internet" for that entire time. To that point, what has been achieved? A company losing market share to rivals and a "dead money" stock share price.

     

    Chambers is an embarrassment as a CEO and with Steve Ballmer leaving Microsoft, Chambers is without a doubt the single worst CEO of a major tech company on the face of the planet. Therefore, you might want to reconsider your bullish position. I don't think Cisco gets interesting again until it's under $18 a share. Then at least you'll have the dividend support to fall back on.
    13 Feb, 05:46 AM Reply Like
  • Maybe Cisco is "approaching the Internet" with an asymptotic strategy : )
    13 Feb, 06:48 AM Reply Like
  • I tend to think they are heading in the right direction. It's a big ship to turn around. The stock repurchase and the dividend increase helps me have patience. I'll hold my nose and add to my position.
    12 Feb, 06:20 PM Reply Like
  • Yes, I couldn't agree more! They are positioned to cash-in as technology evolves with regard to the greater role of sensors in our lives and a new interface for accessing the internet and entertainment.
    12 Feb, 08:57 PM Reply Like
  • I am with you! They are looking into the future and I believe that the reward is worth the wait. In the meantime, it is a pretty darn nice dividend.
    12 Feb, 08:57 PM Reply Like
  • My question is this : 5-10 years out will they have their network chip or the licensing in most of the devices that need to connect to internet. He mentioned miners already using data that is being transmuted. A whole city connected? That is a big task... He did say they had the biggest backlog they have had in 10 years. Not really sure what he was speaking of.
    13 Feb, 01:17 AM Reply Like
  • Referring to EM's Chambers said: "Theres been a slowdown and its very abrupt".
    13 Feb, 04:11 AM Reply Like
  • Not sure about the take-away re: collaboration and PLCM: "The WebEx conferencing business had a very strong quarter up 21%. In WebEx we so many matrix including billable minutes and new customers options grow quite well. This growth came from both very large enterprise deals as well as good traction in the SMB space."
    13 Feb, 07:40 AM Reply Like
  • WebEx was healthy, but videoconferencing/tele... was soft again. That's could be a negative for PLCM.
    13 Feb, 10:40 AM Reply Like
  • A look at Cisco after earnings and new dividend http://seekingalpha.co...
    13 Feb, 09:10 AM Reply Like
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