: Laggard or no, the whole sector got clobbered ahead of ciscos earnings, which look pretty good for me. Beat the street by 1c a share on stellar eps growth...R
I just listened to Cisco's CC and am a bit concerned that their forward guidance might be a negative for the sector tomorrow. Third quarter will be weak. "Gross margins will decrease in all key markets. . .voice and data converging, have a number of design wins, [but] for substantial revenue growth, new world services must accelerate. . . 20 new services providers added to Cisco Service Partners Program, these need to deploy services in order to see growth. . . [guidance:] continue design wins [but] it takes 3 to 4 quarters for design wins to be productive. . . third quarter is challenging and we expect the same this third quarter. . . gross margins will decline. . . growth [will be] 30 - 50% in countries with strong economies, less than 30% in those with average economies, and negative in the weakest economies. . . enterprise growth 10% less than growth of overall company. . . [in enterprise] North America "challenging," January "lumpy". . . [architectural wins]very exciting, major revenues out 3 to 4 quarters. . . ."
The most interesting exchange came between Cisco managers and Tucker Anthony.
Q: What is percentage of new world versus old world equipment?
A: The telecom/data market is estimated at $350 billion. . . [data providers] could service $140 billion in 2002, maybe [Cisco] in 20-40% market share range. Will take 5 to 7 years for new world to pass old world.
[Not sure if it was Anthony or another analyst who pursued the line of questioning:]
Q: The transition from PBXs? Cisco still based one PBXs???
A: We want to transition by 1Q next year. We will lead the industry.
Q: Will it be complete in first quarter 2000?
A: One of campuses will be underway by 1Q next year.
Q: How far away for industry?
A: It's under way now. Decisions [will be] made in next6 12 to 18 months. Will start at access router level first, then move to branch offices. Centers with more than 10,000 people won't be before 2000. . . wins will show up this year. Will affect PBXs this year."
In all. I noticed weakness in their enterprise space and admission of revenues in some areas being 3 to 4 quarters off, so I'm a bit concerned how the Street might respond tomorrow. Hopefully, this is same ol'-same ol' for Cisco.
Pat
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