Tuesday, November 9, 2010

Cisco Systems Inc. (NASDAQ: CSCO): Q1 Earnings Preview 2010

Cisco Systems Inc. (NASDAQ: CSCO) is scheduled to release its fiscal first-quarter earnings after the market close on Wednesday, November 10, 2009. Analysts, on average, currently expect the company to report earnings of 40 cents a share on revenue of $10.73 billion. In the year ago quarter, the company reported earnings of 36 cents per share on revenue of $9.02 billion.

Cisco Systems, Inc. designs, manufactures, and sells Internet Protocol (IP)-based networking and other products to the communications and IT industry worldwide. The company is often considered as a technology-industry bellwether as it dominates the market for routers and switches.

The company's business segments for financial data reporting are defined by geographic region or "theaters": United States and Canada, European Markets, Emerging Markets, Asia Pacific, and Japan. The U.S./Canada segment provided 54.3 percent of fiscal 2010's total revenue.

In the preceding fiscal fourth-quarter, the San Jose, California based company's net income was $1.9 billion or 33 cents a share, compared to $1.1 billion or 19 cents a share in the year-ago quarter. On an adjusted basis, the company earned was 43 cents a share in the fiscal-fourth quarter.Revenue rose 27% to $10.8 billion from $8.5 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 42 cents per share on revenue of $10.87 billion. 

For fiscal first quarter, the networking company anticipates total revenue to be up approximately 18% and 20% year over year, implying first quarter net sales of $10.64 billion to $10.82 billion. Total gross margin in fiscal first quarter will be approximatelyin the 64% to 65% range.

In September, Cisco announced its intention to issue a dividend during the current fiscal year ending July 30, 2011. The company is likely to issue a dividend yield of 1% to 2%. 

Cisco is likely to benefit from a rebound in corporate technology spending. According to technology research firm Forrester, worldwide IT spending is expected to increase 8.1 percent in 2010.

Last month, Cisco introduced Cisco umi telepresence, a first-of-its-kind consumer product that brings family and friends together in HD video at the touch of a button, whether they are around the corner or across the country. Cisco is also working with Verizon to bring the umi experience to Verizon FiOS customers early next year. The two companies have been conducting successful trials of Cisco umi over Verizon's 100 percent fiber-optic network, which delivers what a 2010 PCMAG.COM reader's survey rated the fastest Internet speeds in the United States.

Among other developments, Cisco completed its acquisition of privately-held ExtendMedia Corporation, a leading provider of software-based Content Management Systems that manage the entire lifecycle of video content through monetization for pay media and ad-supported business models. The company also completed its acquisition of privately held Arch Rock Corporation, a pioneer in Internet Protocol-based wireless network technology for smart-grid applications.

The company's stock currently trades at a forward P/E (fye 31-Jul-12) of 12.26 and PEG Ratio (5 yr expected) of 1.10. 

Full Disclosure: None.
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