CSCO warns (well, actually, First Union Securities warns for them, sort of):
( interestingly, they expect CSCO to go to low to mid teens, yet they maintain a 'strong-buy'. One would iuitively think that if you expect a stock to drop 25% that one should sell that stock)
First Union Securities Reduces Estimates for CSCO
03/23/01 06:47 AM
Source: First Union Securities
Company Notes:
In response to continued negative news flow in the industry, we are lowering our revenue estimates for the current April quarter to $5.7 billion (16% sequential decline) from $5.9 billion (12% sequential decline) and EPS to $0.09 from $0.11. For F2001, we are lowering our revenue estimate to $24.6 billion from $25.1 billion and EPS estimate to $0.55 from $0.58. For F2002, we are adjusting revenue estimate to $26.3 billion from $27.9 billion and EPS estimate to $0.63 from $0.68.
In discussions with well-placed industry sources at the Optical Fiber Conference (OFC) this week, the very challenging industry environment was confirmed and even amplified. Nobody we spoke to believes that service provider spending will improve before the beginning of next year.
The component and EMS channel are seeing no relief. All of the major players who sell to Cisco have seen push backs and are talking about lower visibility.
Although we have no proprietary knowledge of Cisco™s intention to pre-announce results, we intuitively think that revenues at or below $5.6 billion would be the level the company would seriously consider pre-announcing. We tend to think that a pre-announcement would drive the stock to the low to mid-teens.
Despite the negative tone of this call, we are maintaining our Strong Buy rating on Cisco Systems. We think that the company™s current challenges are almost 100% macro driven and that relative to its large competitors Cisco™s issues related to product transitions and execution are minor. We believe that because of excellent positioning, a leaner operation, and strong management, the company will emerge from this industry slowdown with greater and more profitable market share gains.
Company Description
Cisco is the leading company in worldwide data networking, and has enjoyed this status for at least five years. Most industry analysts agree that the ihbattlelg for enterprise data networking is essentially over and Cisco has come out on top. Cisco enjoys over 50% market share in virtually every enterprise category today. There were many factors that led to the company™s enterprise dominance, but the most important in our opinion are (1) Cisco™s early leadership in routers and the software-intensive aspect of that product category, (2) outstanding breath of product and successful execution in inend-to-end solutionsln marketing, (3) and unrivaled positioning for Internet-based applications and services.
Additional information available upon request.
First Union Securities, Inc. maintains a market in the common stock of CSCO.
The (an) author(s) of this note/report has(have) a long position in the securities of CSCO.
This is for your information only and is not an offer to sell, or a solicitation of an offer to buy, the securities or instruments mentioned. Interested parties are advised to contact the entity they deal with, or the entity that has distributed this report to them. The information has been obtained or derived from sources believed by us to be reliable, but we do not represent that it is accurate or complete. Any opinions or estimates contained in this information constitute our judgement as of this date and are subject to change without notice. First Union Securities, Inc. (icFUSIle), or its affiliates may provide advice or may from time to time acquire, hold or sell a position in the securities mentioned herein. FUSI is a subsidiary of First Union Corporation and is a member of the NYSE, NASD and SIPC. Copyright © 2001 First Union Securities, Inc. FUSI is a separate and distinct entity from its affiliated banks and thrifts. |
