Cisco Beats Estimates

Cisco (CSCO - commentary - Cramer's Take) reported numbers that came in higher than analyst estimates on both the top and bottom lines.

Cisco said that it earned 38 cents a share (before one-time charges of 9 cents a share due to acquisitions and stock option expenses) on revenues of $9.8 billion versus consensus of 36 cents a share and $9.75 billion, respectively.

As I had expected, CSCO maintained fourth-quarter guidance of revenue growth of 10% year over year with fourth-quarter OpEx of 36% to 37% of revenues and tax rate at around 24% of revenues. The CSCO Kid expects to take additional one-time charges of 4 cents to 6 cents a share in the fourth quarter for acquisitions and stock options expenses.

CSCO also confirmed US enterprise weakness and John "Cache Boy" Chambers said he sees U.S. customers being cautious the rest of 2008.

"We are seeing some orders slide out and that's what normally occurs during a little bit more challenging economic times," Chambers told analysts on a conference call. "Overall I wouldn't say yet that there's a turn. I'd say it feels pretty steady in terms of the business momentum."

CSCO saw good strength in their new technology segment with sales up 1% to $2.4 billion. Router sales were up 14% over last year to $2 billion and switch sales were up 3% to $3.2 billion.

Orders from Internet service providers were actually down 3% year on year. U.S. orders were up in the mid single digit range, European orders were up 14% and emerging market orders were up 10%.

All in all, a nice beat on the bottom line (CSCO usually beats by just a penny) and in-line guidance. Shares were up 33 cents in after-market trading.

How it trades tomorrow would depend entirely on what the sellsiders say.

For Somaney's preview heading into the Cisco conference call, please click here.

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At the time of publication, Somaney had no positions in any of the stocks mentioned, although positions may change at any time without notice.

Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas, and founder of GlobalTechStocks.com, a subscription site that focuses on technology and Indian stocks (including ADRs), providing information, news and chatter. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Somaney appreciates your feedback; click here to send him an email.