...Cisco Chief Executive John Chambers called the results a "home run" in a prepared statement. Some investors were disappointed to see that revenue rose just 2% year-over-year to $4.82 billion, missing the First Call forecast of $4.87 billion. But Chambers argued that the third quarter is typically Cisco's weakest and that the company outperformed its rivals. "We continue to take market share from our top-10 competitors, with revenue growth of 2% year-over-year vs. a drop of 43% for these competitors," he said.
Cisco also managed to boost its gross margins to 63%, six percentage points greater than the previous quarter, thanks to cheaper parts, personnel cuts and tight spending controls on research and development.
Despite the profit increase, however, the telecom-equipment maker remained cautious on its fourth quarter. Chief Financial Officer Larry Carter said the company expects fourth-quarter sales to rise at a low-single-digit rate or be flat with the third quarter. Cisco didn't offer a forecast for fiscal 2003. Chambers said the company's ability to predict results accurately "remains limited."
Quote: "We believe that Cisco represents a unique investment opportunity," John Anthony, an analyst at Fulcrum Global Partners, wrote in a research note Wednesday in which he initiated coverage with a Buy rating. "There are few, if any other companies that can boast $21 billion in cash, the ability to generate $300 million to $500 million in operating cash flows on a monthly basis, no debt, 60% plus gross profit margins and a long-term, organic double-digit growth rate. While some investors may quip that 40 times is an unreasonable multiple to apply to Cisco's earnings, we feel that the scarcity value of Cisco's position warrants this multiple." Anthony doesn't own any Cisco stock, and Fulcrum Global Partners doesn't have in investment-banking relationship with the company....
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