Cisco to Report Q1 Results; Analysts Debate Impact of Economy on Investors

Analysts are anxiously awaiting a report tomorrow of the first-quarter financial results from a San Jose, California-based networking equipment giant that’s viewed as a bellwether for the technology market at large.

 

Experts say the economy has worsened since Cisco Systems Inc. reported its solid quarterly result three months ago.

 

According to The Associated Press, Cisco (News - Alert) – the world’s largest maker of computer networking gear – is expected to report a weakness in orders for the quarter that ended Oct. 24.

 

Analysts reportedly expect the company to post earnings of 39 cents per share, on $10.3 billion in revenue, the AP reports.

 

“That’s short of the company’s own revenue forecast for sales growth of 8 percent from a year earlier, which works out to $10.7 billion,” the news service reports. “For the current quarter, analysts expect earnings of 40 cents per share on revenue of $10.49 billion.”

 

The slowdown in spending, though it’s expected to affect Cisco – a business that’s tied to the investments cycles of its customers – likely won’t be as pronounced as it has been for other companies, since Cisco’s portfolio is so diverse, the AP says, and since it leads the market in Internet routers, such as the ASR 1000 series, shown below.

 

 

Cisco’s conference call will be held at 4:30 p.m. Eastern tomorrow, with details here.

 

The company will report its first quarter earnings at a time of uncertainty for much of the telecommunications market. No one knows how long the economic slowdown will last.

 

Amid that uncertainty, however, many companies appear to be faring well.

 

As TMC (News - Alert) President Rich Tehrani reports, one of those companies is AudioCodes (News - Alert) Ltd, an Israel-based VoIP product provider with offices throughout the United States that’s also a platinum sponsor of the Internet Telephony Conference & Expo, to be held Feb. 2 to 4 in Miami.

 

“They (AudioCodes officials) beat their numbers by 2 cents per share as revenues rose 15.3 percent year-over-year to a record $46.6 million,” Tehrani writes. “GAAP net income rose to $3.1 million and non-GAAP net income rose 72.3 percent year-over-year to $4.8 million. In addition, this year the company has purchased over four million shares of its stock.”

 

Even before Cisco’s own numbers are posted, Cisco’s report tomorrow has analysts debating how investors will respond.

 

According to the AP, one analyst, Simon Leopold at Morgan Keegan, said that since investors are already aware of the economy, they wouldn’t be surprised by lowered forecasts from the company.

 

“Cisco had $19.8 billion in net cash, or $3.29 per share, at the end of last quarter, so the company can keep trucking through a credit crunch,” the AP reports. “Executives have emphasized that the company sees market downturns as an opportunity to invest and grab market share.”

 

According to the AP’s report from Leopold, just as in the previous hi-tech downturn, Cisco likely will “use its strength to invest while others hunker down.”

 

“We think it emerges stronger,” the analyst told the AP.