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Cisco Earnings: Hoping to Evade 'Air Pockets'

SAN JOSE, Calif. ( TheStreet) -- There are hints that Cisco's (CSCO - Get Report) second-quarter results, released after market close on Wednesday, will signal a modest turnaround in the company's fortunes.

Cisco shares took a pounding after it gave weak guidance with its first-quarter results in November, and investors started to question the company's long-term strategy.

Cisco CEO John Chambers will be in the spotlight after market close on Wednesday.

Analysts seem bullish, though. Goldman Sachs analyst Simona Jankowski is expecting a solid quarter from the switch maker. "Cisco has never before missed its previously-issued guidance," she wrote in a recent note. "Our checks, as well as earnings reports so far from companies in Cisco's ecosystem ( EMC (EMC), IBM (IBM), Juniper (JNPR), Broadcom (BRCM), Xilinx (XLNX), AT&T (T), and Verizon (VZ), among others), have not pointed to another leg down in its business."

Cisco is looking for revenue between $10.09 billion and $10.29 billion and earnings between 32 cents a share and 35 cents a share, compared to $9.8 billion and 40 cents a share in the same period last year. Analysts surveyed by Thomson Reuters have forecast revenue of $10.24 billion and earnings of 35 cents a share.

For fiscal year 2011, Cisco expects revenue between $43.6 billion to $44.8 billion, up from sales of $40 billion in the prior year. Wall Street expects revenue of $43.5 billion.

After struggling with the infamous "air pockets" in public sector spending last quarter as well as weakness in cable set-top boxes, investors will be keen to hear what Cisco CEO John Chambers says about the broader IT spending environment.

"With no indications of weakness spreading beyond the federal and cable set-top box areas of exposure, coupled with consensus already modeled below the low end of annual revenue guidance, we view the worst as likely behind for Cisco," said Paul Mansky, an analyst at Canaccord Genuity, in a recent note. "Excluding the two trouble-spots highlighted on the October quarter earnings call, our checks -- direct and indirect -- suggest that Cisco's core markets remain healthy."

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