Cisco is still in transition and Wall Street is split on the stock ahead of the report. Half of the 44 sell-side analysts covering the shares have ratings of strong buy (11) or buy (11), while the other half are at hold (19) or underperform (3). The median 12-month price target of $20 implies upside of 10% from current levels.

The actual earnings aren't usually the problem for Cisco as the networking equipment giant has beaten the consensus view in eight straight quarters. It's the guidance that usually gums up the works. Jefferies previewed the report on Tuesday, saying it expects an in-line quarter and "decent" guidance, but sticking with a hold rating and $15.75 price target. The firm said it's staying on the sidelines because the verdict on the company's turnaround efforts is still out.

"While the stock is fairly cheap, it's still early days in the company's restructuring efforts," Jefferies wrote. "Also, we expect that there's significant inertia in the business -- these types of turnarounds can take a long time. Lastly, the outlook for the business (and earnings power) can still get worse. We believe the company is bracing for more margin pressure down the road."

Jefferies said it looks like enterprise spending held up pretty well for Cisco during the quarter but its expectations for earnings of 37 cents a share on sales of $10.86 billion are below consensus. The firm is anticipating revenue growth in the low single digits going forward from Cisco. The current average analysts' estimate is for earnings of 42 cents a share in the January-ended quarter on revenue of $11.14 billion, a view that Jefferies is comfortable with.

"While the overall macro environment remains weak, the U.S. economy appears to be stabilizing a bit and European sovereign debt worries appear to have eased (at least for the time being)," the firm wrote. "We expect enterprise IT spending to continue on its slow march upward as a result, missing its typical calendar Q4 uptick. This, of course, will be offset by slower U.S. carrier capex spend in calendar Q4. In total, we expect Cisco to guide for revenue growth lower than typical seasonality, which implies Y/Y growth approaching the mid-single digits."

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