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Cisco May Report Higher Q3 Earnings

 May 08, 2012 01:03 PM

(By Mani) Network equipment maker Cisco, Inc. (NASDAQ:CSCO) is expected to report higher earnings when it reports its third-quarter results on May 9.

Wall Street expects Cisco to earn 47 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies that the company will report 12 percent increase from last year when it earned 42 cents a share. The consensus estimates have improved by 2 cents to 47 cents in last 90 days.

Quarterly revenues are estimated to grow 6.5 percent to $11.57 billion. In the year-ago quarter, the company generated revenue of $10.87 billion. Cisco has delivered sales growth of 11 percent, 4.7 percent, 3.3 percent and 5 percent in the preceding four quarters.

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In the preceding second quarter, Cisco reported net income of $2.2 billion or 40 cents per share, compared to $1.5 billion or 27 cents per share for the year-ago quarter. Excluding items, non-GAAP net income for the second quarter was $2.6 billion or 47 cents per share. Net sales for the second quarter rose 11 percent to $11.53 billion. Analysts had expected earnings of 43 cents a share on revenue of $11.23 billion.

"Our checks show CSCO saw a slow start to the qtr (Q3), but orders improving in April. From a geographic perspective, we see European weakness offset by better trends in APJC and the Americas. We expect subdued public sector spending to curtail potential upside, along with some weakness from the financial vertical," UBS analyst Nikos Theodosopoulos wrote in a note to clients.

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The analyst, who has a "buy" rating and $24 price target on Cisco shares, expects Cisco to preserve/gain share in networking, with continued gains in blade servers. UBS first-quarter CIO survey shows 27 percent of respondents seeing Cisco gaining share on a global basis, which is the strongest result for Cisco in the past 4 surveys.

Out of 45 analysts covering the stock, 23 of them rate Intel as "strong buy" or "buy"; 19 analysts rate it as "hold" and 3 analysts recommend investors to "sell" the stock. Shares of Cisco have lost 7 percent in the last 3 months and are trading between $13.30 and $21.30 in the past 52-weeks.

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