This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Cisco's Long-Term Outlook Worries Investors

Chambers, however, still put a positive spin on the company's numbers, pointing to strength in areas such as switching, routing and the UCS server business, which grew 550% year-over-year. "We think that this is not an elbow towards a downturn, we think this is a bump in 2 or 3 areas of our business," he explained, adding that Cisco still has aspirations of long-term growth between 12% and 17%.

Laura DiDio, principal with research firm ITIC, said that Chambers' comments are in line with what's being seen with the broader economic recovery. "Cisco is a very healthy, robust company. All Chambers is saying is more modest growth -- that's reflective of the fact that it's going to take the economy longer than expected to turn around," she said. "I wouldn't get panicked over this one. We'll want to see what they're going to issue for Q3 and Q4, though -- it's when there's three things in a row that you start to get nervous."

Cisco's gross margin of 64.3% was also slightly up on the firm's guidance of 64%, and its enterprise business was healthy, with orders up 16% year-over-year.

"We think it's a couple of quarter phenomenon, we're going to power right through it," Chambers told CNBC in a televised interview before market open on Thursday. "What we're asking investors to do is to have confidence in what Cisco has traditionally done -- our track record at getting market transitions right has been very good."

The company's stock, however, has been relatively listless for the last three months, and any hopes of a post-earnings boost are now fading.

"We don't expect much from the stock near term as guidance implies a back-end loaded fiscal 2011," noted Jayson Noland, an analyst at Robert W. Baird in a note released on Thursday. Noland added that Cisco's plunging share price may offer good entry point into the company's stock, but said that he is removing Cisco as a "best idea" for investors due to increased uncertainty surrounding the company.

Cisco shares were trading down about 15.68% shortly after market open Thursday, at $20.65.

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to

>To submit a news tip, send an email to:


2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CSCO $26.44 0.00%
AAPL $94.19 0.00%
FB $118.06 0.00%
GOOG $695.70 0.00%
TSLA $222.56 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs