This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cisco Delivers, Dodges Economic Woes

Stocks in this article: CSCO

NEW YORK ( TheStreet) -- Cisco (CSCO - Get Report) delivered some much-needed good news in a less-than-stellar tech earnings season on Tuesday, beating estimates and offering healthy guidance despite an uncertain macroeconomic environment.

From spending headwinds to Europe and the looming threat of a fiscal cliff in the U.S., this is hardly the easiest time for Silicon Valley, as evidenced by Nasdaq's 5.26% decline over the last month. Prior to the release of Cisco's results late on Tuesday, there were concerns that Cisco could feel the same pressures that have impacted other tech heavyweights, such as Intel (INTC) and IBM (IBM).

"Almost uniquely, Cisco beat expectations and guided such that consensus estimates are likely to rise this morning," wrote Stuart Jeffrey, an analyst at Nomura Equity Research, in a note released on Wednesday. "We see this as a major positive for Cisco given a backdrop of worsening US tech trends, rivals that missed and guided lower, and broad expectations (including our own) that estimates might be at risk of being cut."

Bucking the trend, the tech bellwether offered decent guidance, predicting second-quarter revenue between $11.9 billion and $12.1 billion and earnings of 47 cents to 48 cents a share. Analysts surveyed by Thomson Reuters were looking for revenue of $12.02 billion and earnings of 47 cents a share.

Jeffrey reiterated his buy rating and $22 price target for Cisco.

Speaking during Cisco's earnings conference call, CEO John Chambers lauded the company's 6% revenue growth "in a very challenging market" noting that many of the firm's peers are reporting declines and lowering future expectations. The CEO, who guided Cisco through a recent turbulent spell, also pointed to the company's solid expense management, which delivered better-than-expected margins.

Once again, Cisco's enterprise business proved key, with the San Jose, Calif.-based firm growing its U.S. enterprise revenue 9% compared to the prior year's quarter. Cisco also enjoyed a 13% hike in its stateside service provider revenue, much to the delight of investors, who have pushed the company's stock northward.

Other highlights from the quarter were Cisco's 62.7% gross margin, up from 61.9% in the prior quarter, and its 27.9% operating margin, up sequentially from 27.5%.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs