UBS Cuts Cisco (CSCO): Wimpy Growth

While Cisco was busy bragging about how fast it’s selling one of its high-end routers, we asked a broader question: How’s your quarter going?

Not well, according to UBS analyst Nikos Theodosopoulos, who downgraded the stock to “neutral” from “buy” today on slowing sales. Theodosopoulos now thinks Cisco (CSCO) July-quarter sales will grow 4% q/q, well below the Street’s 6% q/q consensus. He also trimmed fiscal 2008 and 2009 sales and EPS estimates.

“Recent checks indicate that in addition to prior softness in U.S. enterprise, European enterprise is slowing a bit, and emerging markets, while still strong, are growing in the 25%-30% range, not the 30%-40% target.”

During Cisco’s last earnings call, boss John Chambers floated long-term growth projections of 12%-17% a year. That means Chambers will be shopping again soon: Historical analysis of $40 billion+ tech companies “shows it’s virtually impossible to grow 12% to 17% without requiring acquisitions and compromising operating margins,” Theodosopoulos said. Shares are down 3% this morning.

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