Now that Cisco (CSCO) has been firmly under Chuck Robbins' control for nearly a year, investors will be looking to hear how Robbins' tweaks to the business are going and whether emerging markets will continue to be a sore spot for the tech giant.
Oppenheimer analyst Ittai Kidron did several channel checks throughout the U.S. and Europe and noted that emerging markets are still difficult for the networking giant. "Emerging markets remain challenged, and even in North America and Western Europe, demand trends appear mixed," Kidron wrote in a note to clients. "Although the environment is clearly not easy, we believe management was appropriately conservative in guidance."
Cisco is shifting its business from being just one focused on networking and telecom equipment, to one that is focused on software and services.
There's also been a key emphasis on software defined networking (SDN), a trend that has eaten at Cisco's business, as companies like Facebook (FB) , Google (GOOG) (GOOGL) and others continue to innovate in the Open Compute Project, open sourcing code for networking projects.
Credit Suisse analyst Kulbinder Garcia has consistently said that SDN is a threat to Cisco's high gross margins, as it undercuts the "most profitable part of the IT stacks." Cisco has introduced several key initiatives in SDN, but so far, none have taken off. However, Garcia thinks Cisco can do more.
"We believe it will introduce competition at multiple points in the network and while the impact will take time, the threat will be very real, shrinking gross profit dollars for the entire networking stack," Garcia wrote in a note to clients. The analyst has a underperform rating and a $25 price target on the San Jose-based Cisco.