Cisco Slips on Earnings, Revs - Analyst Blog

Networking gear giant Cisco Systems (CSCO) reported fiscal 1st quarter 2011 earnings after the bell Wednesday, missing the Zacks Consensus Estimates slightly on both the top and bottom lines. Cisco brought in $10.75 billion in revenues in the quarter, below the $10.76 billion expected, and the company reported earnings of 34 cents per share (GAAP), short of the consensus by a penny.

Investors and analysts alike had been cautiously optimistic ahead of the earnings announcement from the global leader in router and switcher production. Cisco shares had been up nearly 1% in the week to date prior to the announcement, and 2 of 14 analysts had upwardly revised quarterly estimates in the past month. Shares have tumbled 4% (roughly $1 per share) in the after-market.

This was the first earnings miss in at least the past 5 quarters. During fiscal 2010, Cisco beat expectations by an average of 11.6% per quarter. The short-term rating before the report was a Zacks #3 Rank (Hold), while the longer-term outlook was an Outperform recommendation on Cisco shares.

In order to compete with other tech giants like Apple, Inc. (AAPL) and Google, Inc. (GOOG) which have branched out into finished consumer products businesses, Cisco bought out two private firms in the 1st quarter, ExtendMedia and Arch Rock. But Cisco also bought back 113 million shares for $2.5 billion in the quarter. And with the after-market sell-off, CSCO shares are now showing a loss year-to-date.

The earnings call should hopefully answer most questions this slightly disappointing report raises. Thursday morning, before the bell, we will publish an in-depth take on Cisco's numbers, as well as the company's outlook.
 
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