Cisco (CSCO) Stock Down Ahead of Earnings Release
NEW YORK (TheStreet) -- Cisco Systems (CSCO) - Get Report stock if falling 0.59% to $27.82 in afternoon trading on Wednesday ahead of the release of the company's fiscal 2016 first quarter financial results, due out on Thursday after the market close.
The company is expected to report a year-over-year increase in earnings per share and revenue.
Analysts have estimated earnings of 56 cent per share on revenue of $12.65 billion for the latest quarter.
Last year, Cisco reported earnings of 54 cents per share on $12.25 billion in revenue for the quarter ended October 25, 2014.
The San Jose, CA-based company produces products, services and solutions for the development and connection of Internet networks.
Cisco agreed to partner with Ericsson (ERIC) on Monday to develop faster and more reliable networks and boost sales by more than $1 billion each by 2018 through a series of agreements.
Insight from TheStreet Ratings Team
Cisco is part of the Action Alerts PLUS charitable trust portfolio. Here's what TheStreet's Jim Cramer, portfolio manager, and Jack Mohr, research director, had to say about the partnership between Cisco and Ericsson:
On Monday, Cisco announced that it had entered into an agreement with Ericsson, the Swedish provider of communication technology and services that will encompass a multi-year strategic partnership. According to management, the relationship, which the two companies have been discussing for the past 13 months, is projected to add $1 billion in annual revenues for each company by 2018 (about 2% of Cisco's fiscal 2015 revenues).
In essence, the agreement will bring together the leader in Internet equipment (Cisco) and wireless equipment (Ericsson) in order to create a fully serviced end-to-end product portfolio for their customers. While not much detail was provided, the two companies will work together to integrate existing equipment, to develop new hardware and services, and to create a secure enterprise technology architecture for seamless indoor/outdoor wireless networks coverage. On innovation, the partnership will allow the companies to collaborate on accelerating the platforms and services needed to digitize countries and capitalize on the Internet of Things (IoT) trend.
All in, we are constructive on the deal from Cisco's perspective. Even though the revenue impact may be small, the downside is minimal and it importantly will expand Cisco's reach into markets where it either currently doesn't operate or doesn't have a large presence. In addition, it demonstrates the company's determination in seeking unique growth opportunities in an environment where large-cap, old-tech companies are competing to capture an increasing share of the IT wallet as spending shifts to data centers/cloud. Perhaps most importantly, it better positions Cisco in the long term to lead the IoT revolution with a wide-ranging network of capabilities and expertise at its disposal.
Jim Cramer and Jack Mohr's "Cisco-Ericsson Partnership Looks Favorable" was originally published on 11/10/15 on Action Alerts PLUS.
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Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.