Cisco Guidance, "Decent" to "Good Enough" (CSCO)

We already reported earnings out of Cisco Systems (NASDAQ: CSCO).  The networking giant posted $0.38 non-GAAP EPS on revenues of $9.8 Billion, which were ahead of First Call targets of $0.36 and $9.75 Billion.  This beat initially had shares up over 2% in after-hours reactions.

In the conference call, CEO & Chairman John Chambers came out with some loose guidance that you would put slightly below estimates for the coming quarter.  The problem is that he did that last quarter too and this still looks like it is in the "good enough" camp. 

Chambers sees challenges in the U.S. persisting, but the overall tone he sees is more temporary or short-lived than a deep continued period of pain. 

For next quarter (its fourth quarter), Chambers sees 9% to 10% revenue growth.  By our calculations, that would come to about $10.28 to $10.37 Billion on the surface.  First Call had estimates are $10.3 Billion.

On a longer-term basis he sees 12% to 17% revenue growth as still being achievable.

Shares were up over 2% initially in after-hours on the earnings beat, and shares had come off to be up only about 0.6% to $26.50 in after-hours. 

This gives an argument for bulls and bears alike.  The bears can say growth is slowing to ‘at-market growth,’ and the bulls can say this is still strong for the environment.  As long as no blow-up happens in the Q&A, we’ll keep this one in the "good enough for us" camp.

Jon C. Ogg
May 6, 2008