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Cisco Systems Is not 'Dead Money'

Stocks in this article: CSCO

NEW YORK ( TheStreet) -- Whenever a major company that is publicly traded is about to step into the earnings confessional the rumors begin to swirl like a dust devil in the desert.

So, in case you didn't notice the title of this article, which member of the DJI 30, a Dow stock that is down almost 7% year-to-date and currently offers a dividend yield-to-price of 3.3%, reports this Tuesday?

No surprise if you answered Cisco Systems (CSCO). The "surprise" may be in the numbers they report concerning last quarter's earnings-per-share and revenue numbers. It will reflect their first quarter of fiscal year 2013 earnings through Oct. 27.

Then we'll all be closely listening for some kind of surprise guidance, either up or down, about the quarter ahead. John Chambers, the CEO of CSCO is a market-mover. When he speaks every analyst that's concerned about the economy and the tech sector listens with bated breath. A shareholder meeting is scheduled for Thursday, Nov. 15.

Speaking of confessions, I want to own shares of CSCO so I can collect their tantalizing dividends that as of now represent a payout ratio of just 19 % of the company's earnings. CSCO has levered free cash (over the trailing 12 months) of $9.18 billion, so they can afford to be even more generous to their long-suffering shareholders.

As of July 28 CSCO had operating cash flow of $11.49 billion. Part of the angst about Tuesday's (after the market's close) unveiling of this past quarter's year-over-year earnings growth has to do with the previous quarter's blow-out positive 56% (year-over-year) upside earnings surprise. At least guidance and expectations for the quarter to be announced has been guided downward.

A consensus of 39 analysts who follow CSCO are anticipating earnings of 46 cents per share for the current quarter. This would be 3 cents higher than the same quarter last year. That doesn't appear to be overly optimistic.

Analysts seem to be in near harmony that total quarterly revenue will be around $11.79 billion, representing a quarterly revenue growth (YOY) of a modest 4.6%. Out of the nearly 39 analysts only one has lowered both their quarterly earnings and revenue expectations for the quarter to be reported.

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