Cisco reports tonight after the close. Call at 4:30 EST / 1:30 PST. We will provide live coverage and analysis.
Based on our analysis and the softening economy, the Q4 EPS whisper of $0.42 does not appear to be a lay-up. The most important element of the release, moreover, will be commentary around the current tone of business and outlook. Cisco started the tech-wreck last quarter when John Chambers said that US enterprise spending was “soft.” Cisco no doubt factored this softness into its guidance, but the consensus revenue estimates still do not seem conservative. The consensus estimates for the April quarter call for 15% growth–only a minor deceleration.
Cisco’s revenue growth has decelerated significantly for the last four quarters, and this quarter’s guidance does not call for much additional deceleration (see this spreadsheet). Operating margin assumptions appear to be about a point too conservative (based on a 1 point sequential jump last year), so there appears to be some easy upside to consensus EPS of $0.38. The whisper of $0.42, however, does not seem a cake walk.
Consensus for Key Metrics
- Revenue: $9.79 billion, +16%
- EPS: $0.38 ($0.42 whisper)
- Gross Margin: 65.5%.
- Operating Profit: $2.9 billion
- April Quarter: $10.2 billion of revenue, +15% / EPS of $0.39
- Full Year 2008 (July): $40.3 billion / $1.59
- Full Year 2009 (July): $46.2 billion / $1.81
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