Observers expect Cisco executives to make vaguely optimistic predictions about equipment sales, despite their hedging about the uncertainty of the economic outlook. In other words, steady as she goes.
"There aren't going to be any aisle-clearing panic rampages like we had three years ago at
conference," says a Silicon Valley-based investor who is long Cisco. "Chances are, there's going to be something for everyone and most people will leave feeling a little better about the company."
They'll need as much to sustain the run Cisco has been on lately.
Cisco shares have soared 65% since hitting a three-year low of $12.09 on Sept. 21, despite a notable lack of evidence that computer networking gear sales have bottomed. Monday, Cisco fell 58 cents to $19.86.
Perhaps convinced that few companies have Cisco's financial strength -- $19.1 billion in cash -- let alone the right business plan to weather the tech downturn, investors have been willing to pay dearly for Cisco shares. Minus the cash and securities, Cisco trades between six and seven times sales estimates. But some fans say the networker's 55% gross margins and the weakening state of its competition help justify the price.
On that score, Cisco is likely to speak elliptically of certain market-share gains it is making against archrival router maker
. Juniper has been silent on the matter, answering specific questions with general position statements. Last quarter, Cisco reversed a recent trend toward shrinking core router market share, gaining 5 points sequentially. Cisco now has 65% of the market to Juniper's 32%.
One thing Cisco can't sidestep is the telco issue. The company may again acknowledge the difficulty it's had selling large networking systems to phone service providers and possibly use the occasion to outline a new service-provider strategy. Telco sales, which at one time were to be the growth engine for another decade of Cisco success, have fallen in disarray with the departure of several top executives of the division.
To be sure, Cisco learned the hard way about being overly optimistic in its presentations to investors. Last year's analyst conference opened with CEO John Chambers' gushing, absurdly it turns out, about the
50% growth he saw ahead. Six weeks later, in a dramatic display of backpedaling, Chambers
warned that his previously rosy assessments were dead wrong as equipment-spending cuts and phone company bankruptcies suddenly took their toll.
Don't expect a repeat.
"A friend, an insider at Cisco, told me last night that there'd be no surprises, and I think we all knew that," says the Silicon Valley investor. "I really think there's a far greater chance of upside than downside, but we're talking about a stock move of, like, 50 cents."
So, a year later, it looks as if Cisco's more than happy to take investors for a walk on the mild side.