Cisco Systems Inc. Dow Jones Newswires -- January 29,
1999 Cisco Seen Delivering 2Q Earns In Line With 35c/Shr View
By Joelle Tessler
NEW YORK (Dow Jones)--Analysts aren't expecting any surprises from computer networking industry giant Cisco Systems Inc. (CSCO) when it reports its fiscal second-quarter results after the market closes Tuesday.
Wall Street's consensus estimate for the quarter, which ends in January, is an earnings number of 35 cents a share, up from a split-adjusted 29 cents a year earlier.
Given Cisco's history of delivering results that are in line with expectations - as well as its ability to manage its numbers since it holds a leading position in the networking equipment industry - most analysts don't expect the company to report a number that is any higher than 36 cents a share.
"They have so much flexibility to smooth and manage the numbers," said Nutmeg Securities analyst Andy Schopick.
Donaldson Lufkin & Jenrette Securities analyst Stephen Koffler projects Cisco's second-quarter revenue will come in at $2.75 billion, up from $2.59 billion in the first quarter and $2.02 billion in the second quarter of last year.
As the largest of the companies that make equipment used to connect computers to form networks, including the Internet, Cisco has products in almost every segment of the business.
The company dominates the router business and is a leader in the market for local area networking, or LAN, products - which go to enterprise, or corporate, customers.
Even though growth in the LAN market has slowed from levels of a year or two ago, Schopick explained that Cisco is doing well in this area since it continues to capture market share from its competitors.
Although there are concerns that corporate customers could cut back substantially on spending on networking equipment in 1999 as they feel the impact of the economic slowdown in many emerging markets, most analysts say the enterprise business appears to be faring well right now.
Koffler added that corporate customers don't appear to be diverting resources from networking to Year-2000 spending, although that could still happen later in the year.
Meanwhile, Cisco continues to expand its presence in the fast-growing wide area networking, or WAN, market - which is made up of telecommunications companies and Internet service providers.
Koffler expects Cisco to offer an optimistic outlook for a number of new products, including its Catalyst 8000 family of layer 3 switches. A high-end backbone version of the product has been widely available since January, he said.
In addition, Cisco is shipping a number of new asynchronous transfer mode, or ATM, switches for the service provider market, including the TGX 8750.
Shares of Cisco set a 52-week high of 110 3/8 on Friday.
-Joelle Tessler; 201 938-5285
wsj.com
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