Thu, Feb. 12, 2:00 PM
- At least six firms have upped their Cisco (CSCO +8.7%) targets in response to the company's FQ2 beat, in-line guidance, and healthy product orders. Shares are at their highest levels since 2007.
- "We came away from the call with greater confidence in Cisco's technology leadership, execution and recovery trajectory," writes Oppenheimer (Buy). "While the headwinds in emerging markets and service provider are likely to remain in place, we believe that by now they are well reflected in estimates."
- William Blair (Outperform): "While Cisco clearly benefited from easy comparisons across its business and several major product cycles, we nonetheless walked away with increased confidence in the company's business momentum, growth prospects and strategic positioning."
- Sterne Agee (Buy): "The biggest takeaway that should drive incremental support in the stock near term is the improving tone on emerging markets (India plus 11%, Mexico plus 21%) along with U.S. commercial strength up 12% against a relatively tough comp (total Americas up 7% along with EMEA up 7%)."
- Deutsche (Buy) believes Cisco businesses responsible for half of sales - data center switching, security, services, and Wi-Fi - can post growth "2x or higher" than GDP growth. Credit Suisse (Underperform) remains bearish on a belief SDN will begin having a bigger impact on Cisco's sales and margins over the next 12-18 months.
- John Chambers mentioned yesterday Cisco now has 300+ customers for its APIC SDN controller. The remarks come after VMware reported paid customer count for its rival NSX platform rose 60% Q/Q in Q4 to 400+. Facebook, meanwhile, has just revealed a new modular switch platform for its open-source Open Compute Project.
- Prior Cisco earnings coverage
Thu, Feb. 12, 11:03 AM
- Cisco (NASDAQ:CSCO) beat FQ2 estimates on the back of 8% Y/Y product growth (aided by favorable comps), offered in-line guidance (better than feared, given forex pressures), and reported a 5% increase in product orders. Enterprise, SMB, and public sector orders respectively rose 10%, 8%, and 7%, and service provider orders dropping 1% (compares with a 10% FQ1 service provider drop).
- Cisco still isn't modeling a rebound in service provider or emerging markets demand for several quarters, and forecasts global service provider capex will be down by a mid-single digit % in 2015. But it's more optimistic about enterprise, public sector, U.S., and EMEA demand.
- Telecom and networking equipment vendors, many of whom have been hit hard by capex pressures, are rallying following Cisco's numbers, as are a couple of component/chip suppliers. The Nasdaq is up 0.7%.
- Notable gainers include Alcatel-Lucent (ALU +4.7%), Aruba (ARUN +3.4%), Ruckus (RKUS +5.1%), Sonus (SONS +3.4%), Extreme Networks (EXTR +3.4%), Brocade (BRCD +1.9%), Adtran (ADTN +3%), Infoblox (BLOX +2.7%), Finisar (FNSR +2.1%), Cavium (CAVM +2%), Ixia (XXIA +1.9%), and Mavenir (MVNR +3.4%).
- Cisco's 18% Y/Y wireless product sales growth appears to be going over well with Aruba and Ruckus investors, and its 11% switching growth with Extreme and Brocade investors.
Wed, Feb. 11, 5:00 PM
- Cisco (NASDAQ:CSCO) guides on its FQ2 CC (webcast) for 3%-5% FQ3 revenue growth and EPS of $0.51-$0.53, in-line with a consensus of 4% growth and $0.52.
- John Chambers notes Cisco isn't modeling a rebound in emerging markets and service provider sales for several more quarters. As is the case for other enterprise tech giants, forex is acting as a headwind.
- Product orders rose 5% Y/Y in FQ2, an improvement from FQ1's 1%; book-to-bill was above 1. Americas orders +8% (U.S. +7%) and EMEA +7%, but Asia-Pac -6%, with a 19% Chinese decline more than offsetting 11% Indian growth.
- Enterprise orders +10%, with Cisco's 28 largest enterprise accounts growing over 30%. Commercial (SMBs) +8% and public sector +7%. Service provider orders fell 1%, but that's a big improvement from FQ1's 10% drop.
- Product segment performance: Switching revenue +11% to $3.62B (lifted by Nexus 3K/9K data center switch growth); routing +2% to $1.76B; collaboration +10% to $990M (improved from recent quarters); data center (UCS servers) +40% to $846M; service provider video -19% to $776M (set-top share loss); wireless +18% to $611M (Meraki sales doubled); security +6% to $416M.
- FQ2 results, dividend hike/details
Wed, Feb. 11, 4:20 PM
- Cisco (NASDAQ:CSCO) uses its FQ2 report to state it's upping its quarterly dividend by $0.02 to $0.21/share; that's good for a 3.1% yield at current levels. The next dividend will be paid on April 22 to shareholders on record as of the April 2 close.
- With the help of favorable comps - sales declined sharply a year ago - product revenue rose 8% Y/Y in FQ2 to $9.08B, a marked improvement from FQ1's flat growth and driving the revenue beat. Services revenue rose 5% to $2.86B.
- Gross margin was 61.7%, down from 63.3% in FQ1 but up from 61.3% a year ago, and in-line with guidance of 61%-62%. GAAP operating expenses rose 4% to $4.47B; R&D totaled $1.53B, sales/marketing $2.31B, and G&A $490M.
- $1.2B was spent on buybacks, up from FQ1's $1B. CC at 4:30PM ET, guidance should be provided.
- CSCO +1.5% AH to $27.31.
- FQ2 results, PR.
Wed, Feb. 11, 4:07 PM
Tue, Feb. 10, 5:35 PM
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Thu, Jan. 29, 2:59 PM
- Cisco's (CSCO +1.1%) FQ2 report will arrive after the close on Wednesday, Feb. 11. CC (likely to feature guidance) at 4:30PM ET.
- Consensus is for revenue of $11.8B (+5.7% Y/Y) and EPS of $0.51. The networking giant is up 9% since providing an FQ1 beat and light FQ2 guidance on Nov. 12.
- Separately, Cisco has unveiled its ONE software licensing program, which (echoing programs from Microsoft, VMware, and others) places a variety of products previously sold piecemeal into bundles created for managing corporate campus, data center, and WAN hardware. A cloud management bundle is also launching, as is an option to buy the bundles via subscriptions.
- "Most people don't think of Cisco as a software company per se, but we'd be the fifth largest software company in the world based on revenue," says exec Don Lohmeyer. Back in 2012, Cisco set a goal of doubling software sales by 2017.
Nov. 13, 2014, 11:36 AM
- "In the context of the considerable headwinds Cisco (NASDAQ:CSCO) currently faces, the results this quarter were quite solid," writes BMO (Outperform) following Cisco's FQ1 report. With soft carrier (orders -10% Y/Y) and emerging markets (BRIC/Mexico orders -12%) demand already telegraphed by Cisco and peers, investors are giving the company a pass for its light FQ2 guidance.
- RBC (Outperform): "Strong GM improvements and the rebound in switching point to encouraging trends for Cisco, which is also squeezing out added workforce productivity." Atlantic Equities (Overweight): "At 11x PE 2015E and 8x EV/FCF, Cisco’s valuation appears undemanding among other large cap tech stocks, especially given its 7% earnings CAGR 2014-17E."
- Bears remain worried about sales growth and the long-term impact of SDN. Citi (Sell): "We continue to believe Cisco remains a flat to low-single-digit grower with little upside to op margin. We therefore believe the current 12x P/E more than compensates for the 3% dividend, yet slowing buyback.”
- JPMorgan (Underweight): "We continue to believe current switching industry ASPs and margins are unsustainable due to structural technology shifts." For its part, Cisco disclosed its ACI/APIC SDN/networking virtualization solution saw its paid customer count more than double in its first full quarter of shipments. VMware is seeing growing demand for its rival NSX platform.
- FQ1 product performance: Switching +3% Y/Y to $3.85B (strong data center switch sales); routing -4% to $1.95B (carrier weakness); collaboration -10% to $949M (telepresence weakness); service provider video -12% to $871M (set-top weakness); data center +15% to $693M (server share gains); wireless +11% to $605M (strong Meraki sales); security +25% to $455M (boosted by the SourceFire acquisition).
- Prior Cisco earnings coverage
Nov. 12, 2014, 4:50 PM
- Cisco (NASDAQ:CSCO) guides on its FQ1 CC (webcast) for 4%-7% Y/Y FQ2 revenue growth and EPS of $0.50-$0.52. That's below a consensus for 8.4% revenue growth and EPS of $0.53.
- John Chambers states the forecast reflects an "added measure of conservativeness" regarding weak U.S. carrier spending. Cisco traded lower on Monday after AT&T forecast its capex would fall by $3B in 2015.
- Cisco's total product orders rose 1% Y/Y in FQ1, even with FQ4's clip. Americas +2%, EMEA +6%, Asia-Pac/Japan -12%.
- U.S. orders rose 3% Y/Y thanks to public sector (+22%) and SMB (+7%) strength, but U.S. service provider orders fell 18%.
- CSCO -0.6% AH. FQ1 results, details.
Nov. 12, 2014, 4:18 PM
- Along with its FQ1 results, Cisco (NASDAQ:CSCO) announces CFO Frank Calderoni is leaving at the end of 2014. Business technology/operations finance SVP Kelly A. Kramer will replace him.
- FQ1 gross margin was 63.3%, +150 bps Q/Q and +30 bps Y/Y, and above guidance of 61%-62%.
- Product revenue rose fractionally Y/Y to $9.44B, after declining 2% in FQ4. Services revenue (driven by past sales, more stable) rose 5% to $2.8B, an even growth rate with FQ4.
- GAAP opex rose 1% Y/Y to $4.99B. $1B was spent on buybacks; $1.5B had been spent in FQ4.
- FQ1 results, PR
Nov. 12, 2014, 4:06 PM
Nov. 11, 2014, 5:35 PM
Aug. 14, 2014, 12:40 PM
- Six firms have hiked their Cisco (CSCO -2.8%) targets after the company beat FQ4 estimates, issued mixed FQ1 guidance, and announced plans to cut another 6K jobs. But that isn't stopping shares from selling off due to worries about weak demand from carriers (orders -11% Y/Y) and emerging markets (orders -9%).
- "Notwithstanding the fact that capex will be fairly weak in [2H14], Cisco's [carrier] order performance in the first calendar half of 2014 demonstrates meaningful share loss in addition to soft carrier spending," says MKM (Neutral).
- Nonetheless, the firm thinks Cisco's total orders will rise at or near a low double-digit % in FQ1 (favorable comps will help). "We still believe it is profitable to own Cisco when orders and revenue growth are accelerating."
- Bulls are focusing on healthy enterprise orders and strong early uptake for the Nexus 9000/ACI SDN and networking virtualization platform. John Chambers mentioned on the CC (transcript) the platform's customer count more than tripled in FQ4 to 580+, and that there are over 60 customers for the related APIC software controller (just launched).
- Several peers and suppliers with strong carrier exposure are selling off. Cisco's numbers follow a soft outlook from JDS Uniphase, and coincide with light guidance from Oclaro. ALU -1.6%. JNPR -1.8%. FN -7.4%. ZHNE -2.1%. EZCH -3.8%.
- Prior Cisco earnings coverage
Aug. 13, 2014, 5:03 PM
- Cisco (NASDAQ:CSCO) guides on its FQ4 CC for flat to 1% Y/Y FQ1 revenue growth and FQ1 EPS of $0.51-$0.53 vs. a consensus for flat growth and EPS of $0.53. Gross margin is expected to be in a range of 61%-62% vs. 61.8% in FQ4.
- Cisco plans to cut another 6K jobs (8% of the workforce), and to record a $0.14-$0.18 FQ1 GAAP EPS charge.
- John Chambers has offered cautious remarks about service provider and emerging markets demand. Carrier sales are expected to be weak for the next several quarters, and Cisco isn't expecting a major near-term recovery in emerging markets demand.
- Total product orders only rose 1% Y/Y in FQ4. Americas orders +2%, EMEA +2%, Asia-Pac -7%. Enterprise orders +9%, SMBs +8%, public sector flat, service provider -11%.
- U.S. orders +5% (strong enterprise/SMB demand) and India +18%, but China -23% and other emerging Asian markets -34%.
- Weak points: Routing revenue -7% Y/Y, switching -4%, service provider video -10%, collaboration -4%. Strong points: Data center +30% (UCS servers now on a $3B/year run rate), security +29% (boosted by SourceFire).
- CSCO -1.1% AH. FQ4 results, details
Aug. 13, 2014, 4:18 PM
- Cisco (NASDAQ:CSCO) had an FQ4 gross margin of 61.8%, -90 bps Q/Q and -30 bps Y/Y, but in-line with guidance of 61%-62%.
- Product revenue -2% Y/Y to $9.53B, a much smaller decline than FQ3's 8%. Service revenue (fueled by past product sales) rose 5% to $2.83B, better than FQ3's 3%.
- GAAP opex +4% Y/Y to $4.7B. R&D spend +5% to $1.6B, sales/marketing +5% to $2.5B, G&A -14% to $508M.
- Free cash flow was $3.3B, above net income of $2.8B. The deferred revenue balance (boosted by software/services) rose 5% Y/Y to $14.1B.
- $1.5B was spent on buybacks vs. $2B in FQ3. Cisco ended FQ4 with $52.1B in cash/investments, and $20.9B in debt.
- CC at 4:30PM, guidance will be provided.
- CSCO +0.8% AH. FQ4 results, PR.
Aug. 13, 2014, 4:07 PM
CSCO vs. ETF Alternatives
Cisco Systems Inc is engaged in designing, manufacturing and selling of Internet Protocol (IP) based networking products and services related to the communications and information technology (IT) industry.
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