Cisco Down Ahead of Wednesday's Earnings, Alalysts Check In
by Eric Savitz
Cisco Systems (CSCO) shares are under pressure Monday, ahead of the company’s Wednesday afternoon announcement of earnings for its fiscal second quarter ended January. The looming Cisco results are giving some investors the jitters, given what happened the last time they reported earnings: CEO John Chambers cautioned that the company was seeing a year-over-year decline in U.S. enterprise orders, and the broad stock market plunged.
While certainly investors will be watching for any sign of trouble in the January quarter results, the real issue going to be what the company says about the rest of its fiscal year, which ends in July. This morning, there was a flurry of Street comments on the prospects for the quarter - and beyond. One thing that makes today’s notes a little disturbing is the range of findings from “channel checks” on the strength of the quarter. Here are some excerpts:
Sanjiv Wadhwani, Stifel Nicolaus: He expects the quarter in line with consensus of $9.8 billion in revenue and EPS of 38 cents. But he also says that checks show that Cisco was “stretched” on the switching side of the business, implying “continued weakness in its enterprise business.” He says bookings tracked slightly below plan. He expects “cautionary statements regarding the near-term outlook.”
Samuel Wilson, JMP Securities: He says that channel suggest that business was “good but not great.” He sees “limited chances” of a significant upside revision to ‘08 estimates.
Cobb Sadler, Deutsche Bank: His checks find “surprisingly solid” January quarter trends. He says integrators he talked to were ahead of plan and have seen little change in demand from the financial services sector. But he also says the April consensus revenue of $10.2 billion, up 4%, is “aggressive.”
Inder Singh, Lehman: His checks find “some recent booking softness,” though he continues to recommend the stock as cheap at about 14x estimates 2009 EPS.
Troy Jensen, Piper Jaffray: He thinks Cisco benefited from “strong carriers and international sales” in the quarter, and could slightly beat the consensus. He thinks April quarter guidance will be in line with the consensus of $10.2 billion and 40 cents.
Paul Silverstein, Credit Suisse: He expects January quarter results in line to slightly better than the consensus, with in-line April quarter guidance. Stating the obvious, he says that the data point will be Chambers’ comments on the business environment.
John Anthony, Cowen: He says the stock’s appreciation is limited until uncertainty is cleared. “We had hopes that visibility into Cisco’s near-term prospects would have improved by this point; unfortunately it has not…end-demand for Cisco’s products, especially that associated with enterprise and commercial customers, seems to be deteriorating across multiple verticals and geographies.”
Cisco Monday is down $1.09, or 4.4%, to $23.85. |
