Earnings Preview: Cisco

| About: Cisco Systems, (CSCO)
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Cisco (NASDAQ:CSCO) is expected to report Q4 earnings after the market close on Wednesday, August 15, with a conference call scheduled for 4:30 pm ET.


The consensus estimate is 46c for EPS and $11.60B for revenue, according to First Call. Cisco warned heading into Q4 that global economic weakness would hold back its results. Management's guidance from the May 9 call was for Q4 EPS of 44c-46c, with revenue up 2%-5%. The gross margin for Q4 was guided to 61%-62%.

Analyst Views

Avondale anticipates Cisco's Q4 results will be in-line with its and the consensus estimates. While Avondale believes the company's exposure to public sector spending and Europe will continue to dampen top-line growth, Cisco is likely to report relative strength in several other areas of its business. Within North America, carrier capex is normalizing and Avondale anticipates a fairly healthy enterprise spend in the switching and wireless LAN categories on stable pricing. In addition, the firm suspects Cisco is seeing fairly good demand for its video products given the uncertainty in the market over Google's (NASDAQ:GOOG) purported desire to sell Motorola's Home Networking division. Avondale believes Cisco's Q4 results and outlook could be "a hair better than forecasts." Because Cisco's quarter ends a month later than most technology companies, it's often seen as a window into demand for the quarter -- so analysts will be listening for hints about global demand.