This Day On The Street
Continue to site
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

Cisco Beats -- on Pathetically Low Expectations

NEW YORK (TheStreet) -- Cisco Systems (CSCO - Get Report) stock popped overnight as its earnings beat low expectations.

But beneath the happy talk and careful management of the street -- Cisco shares had been falling into earnings -- lies a company that remains tied to carrier customers and is unable to prosper in new markets.

For its most recent quarter, Cisco reported net income of 51 cents per share on $11.5 billion in revenue, beating expectations of 48 cents per share in earnings and $11.36 billion in revenue. Sterne Agee raised its estimates on the stock with a price target of $26 per share. It was trading at $24.38 as of 10 a.m. Thursday, up 6.9% for the day and 3.7% year to date.

That sounds good, but a year ago Cisco had 13% more net income and 6% more in sales. The bottom line improvement was spurred by layoffs.

Cisco rose to prominence in the 1990s as companies built their own networks. It was, briefly, the world's most valuable company, in the year 2000, with a market cap of over $500 billion. Cisco's market cap today is about $117 billion.

Its slump came as phone companies gradually replaced traditional switches with data networking. Tech investors know if you're looking to carriers for growth you're headed for a bad place. And on Internet issues like net neutrality, long-time CEO John Chambers now parrots the carrier line.

In the last few years the company has made several moves to get out of that box, but each has been quietly abandoned.

Consumer products? In the last years Cisco has spun out its Linksys router unit to Belkin and dropped its Flip mini-camcorder. Technology analysts say it has abandoned the small to medium business market as well.


WATCH: More tech videos on TheStreet TV

1 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
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
SYM TRADE IT LAST %CHG
CSCO $25.52 -1.47%
AAPL $109.27 -1.00%
FB $88.26 0.12%
GOOG $600.70 -0.92%
TSLA $241.93 -1.48%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs