Earnings Preview: Cisco Systems

Cisco Systems (CSCO) is expected to report Q4 earnings after the market close on Wednesday, August 10, with a conference call scheduled for 4:30 pm ET.

Guidance

The consensus estimate is 38c for EPS and $10.98B for revenue, according to First Call. Cisco is expected post a slight Q4 sales gain and a muted outlook. Management had announced on its last earnings call that it would take a Q4 restructuring charge of $40M as the company attempts to re-invent itself and is business model. Guidance for Q4: adjusted EPS 37c-39c on approximately $10.84B-$11.05B in revenue. A Q4 non-GAAP gross margin of 62% and non-GAAP operating margin 24%-25%. CEO John Chambers had said that Q4 guidance not indicative of FY12 growth potential -- but also said that 12%-17% long-term annual revenue growth is "off the table".

Analyst Views

Wedbush expects Cisco to announce further steps in its turnaround strategy with potentially more asset sales, new product announcements, and a strengthening of the partnership channel. The firm believes that comp Juniper Networks' (JNPR) recent results and worse-than-expected guidance reinforces the view that the macro environment will continue to be challenging in networking and that a turnaround will take several more quarters to see meaningful results. Analysts are starting to upgrade their ratings on Cisco lately, believing the downside risk is priced into its current share price. Consensus for Q1/FY12 is: 39c/$1.71 on $10.99B/$45.44B in revenue.