Cisco's CC: EPS guidance, price pressure, opex, server sales

|About: Cisco Systems, Inc. (CSCO)|By:, SA News Editor

Cisco (CSCO) expects FQ4 EPS of $0.51-$0.53 vs. a $0.51 consensus. In spite of posting an FQ3 gross margin of 62.7%, the company is only guiding for an FQ4 GM of 61%-62%.

John Chambers once more states Cisco is seeing price pressure in markets such as campus switching (Huawei and H-P are competing aggressively here), but insists SDN (generally seen as a 2015-and-later problem) isn't a factor. Switching, emerging markets, and carrier sales are expected to stay pressured near-term.

Though GAAP opex fell 2% Y/Y, non-GAAP opex fell 6% (boosted EPS). Headcount declined by 230 Q/Q to 73.8K.

Data center (UCS server) sales remain strong, growing 29% Y/Y (share gains against Dell/H-P/IBM). Likewise, service provider video sales (-26%, set-top share loss to ARRS) remain weak.

Wireless sales only rose 3% (possible share loss to the likes of ARUN, UBNT, and HIVE), but orders rose 12%, and Meraki continues seeing strong user growth. Recently-acquired Sourcefire saw orders grow 20%.

Cisco says its new ACI/Nexus 9000 SDN/networking virtualization platform (praised for its feature set, but not for its pricing) gained 175 customers, and has a pipeline of 1K+.

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