Cisco Systems Earnings Preview Q3 2007 (CSCO)

May 8, 2007 by Douglas A. McIntyre

Cisco Systems Inc. (CSCO-NASDAQ) will grace tech traders with its earnings report after the close today.  First Call estimates are $0.33 EPS and $8.76 Billion revenues.  Its last revenue range was $8.7 billion to $8.8 billion.  We’ll also get to see if the mid-April comments out of the company were just noise or if there is some real meat behind it.

The stock is within 5% of its yearly high, and the company is just in a far different place now than it was in the past.  Our own Doug McIntyre laid out the scenario where Cisco could see $34.00 per share by mid-year.  The average analyst target on Wall Street is roughly $31.00 to $32.00, so based on a hybrid model you could expect to see “valuation” downgrades start to come in just north of $30.00.

Options traders are braced for a move of $0.75 to $0.85 in either direction, but that number may be different tomorrow.  That would actually put it at up to a 3.5% stock move at the higher-end of the range.  As a reminder, this was Jim Cramer’s #3 pick for his Top Growth Stocks for 2007 back at the start of January.

The latest WebEx (WEBX) deal will be one to watch for the company as yet another platform for the company.  Sure, Cisco had a video platform.  This gave it more customer depth.  This was the latest ploy for the company to basically own the Internet from the wires leaving the servers to the wires (or equivalent) all the way up to your computer or web connecting device.  This should also be the last of the full pre-integrated Scientific-Atlanta comparison quarters that helped generate such a solid boost to sales.

Maybe John Chambers will comment on John McCain’s commenting about how he would want to have him on a technology committee.  Probably not.  McCain must have been reading what we wrote on Chambers back in January, because we noted the likelihood that Chambers would be swept up for a key advisory position or even much higher in the world.

Jon C. Ogg
May 8, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in any of the companies he covers.