Cisco Gets Bold With Guidance

For the first time since its recent surge began, Cisco Systems Inc. (Nasdaq: CSCO) is increasing its forecasts for the future, saying long-term revenue growth could reach 12 to 17 percent.

That's a notch up from the 10 to 15 percent that CEO John Chambers has preached for the past couple of years.

Cisco's earnings calls have been repeatedly upbeat, but each time, Chambers stuck stubbornly to that range of 10 to 15 percent growth. But in closing out fiscal 2007 with today's earnings report, executives decided it was time to ratchet up the numbers.

"After careful consideration, and watching these trends over three years, we have decided to increase our expectations," Chambers said on today's conference call with analysts.

Key to the increase is the potential Cisco sees in helping businesses adopt business models that take advantage of collaborative tools and Web 2.0 technology. That's been a mantra of Chambers's for more than a year, exemplified by new products like the TelePresence videoconferencing system. (See Cisco Dials Up Videoconferencing.)

The higher estimates start now, with Cisco projecting revenues of $9.45 billion to $9.55 billion for its first fiscal quarter -- or, 16 percent revenue growth when compared with a year ago.

For its fourth quarter, ended July 28, Cisco reported net income of $1.9 billion, or 31 cents per share, on revenues of $9.4 billion, compared with net income of $1.9 billion, or 30 cents per share, on revenues of $8.9 billion the previous quarter.

In its fourth quarter a year ago, Cisco reported net income of $1.5 billion, or 25 cents per share, on revenues of $8 billion.

Non-GAAP earnings of 36 cents per share beat Wall Street estimates by a penny, according to Reuters Research .

On a side note, Cisco says this is the final quarter where it will spell out the revenues of Scientific Atlanta . For all of fiscal 2007, Scientific Atlanta sales were $2.8 billion. That's compared with $988 million in fiscal 2006, but remember, Scientific Atlanta was acquired in February, halfway through the fiscal year.

Cisco stock was up 52 cents (1.8%) at $30.21 in early after-hours trading.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 3:04:21 PM
re: Cisco Gets Bold With Guidance Stock is up 5.5% after-hours now ... shot up right after the story was filed. That's probably the reaction to the new guidance; I'd been watching the price on 20-minute delay.

To clarify: For fiscal 2008, Cisco is predicting 13-16% growth.

12-17% is the long-term number.

Also, CFO Dennis Powell announced he's leaving after Q2'08.
gotman 12/5/2012 | 3:04:19 PM
re: Cisco Gets Bold With Guidance Whats wrong with you people, why aren't people excited about csco?

It use to shack the street 3 years ago. Is it just a house hold?
Pete Baldwin 12/5/2012 | 3:04:15 PM
re: Cisco Gets Bold With Guidance Apparently lots of people think so. At least one story (AP) gives Cisco credit for today's stock rise. Finisar is up 12%, apparently just on Cisco strength (Cisco's a 20%+ customer for them).

Doesn't explain why, for example, Cavium is up, but - whatever. John Chambers was on CNBC this morning, apparently; maybe that magically makes everything right with the world.

Oh but wait, now the AP is giving us this subhead: "Wall Street Gives Up Gains As Jitters Return, Despite Cisco Earnings, Fed Statement." Easy come, easy go.
tsat 12/5/2012 | 3:04:15 PM
re: Cisco Gets Bold With Guidance
I think this is good news for the whole industry.

Raymond McConville 12/5/2012 | 3:04:15 PM
re: Cisco Gets Bold With Guidance But it finished the day up over a 150 points. It's been one of those crazy volatile weeks where you'll see days that the market closes up like 2 points but at 4 times normal trading volume. I don't think investors have any idea what to do right now or what to make of the uncertainty in the stock market.
Mark Seery 12/5/2012 | 3:04:14 PM
re: Cisco Gets Bold With Guidance While it is true that geopolitical fears is putting an oscillating risk premium into oil, the current market volatility is beling blamed on the uncertaintly about the credit situation.

That and the perception of excess valuation growth in commodities over the last few years is resulting in people looking at tech as a potential area of (stock)market leadership. The reception by the markets of Cisco's results has added energy to that thesis. Cisco being seen as a quality stock in an uncertain market is also part of the dynamic.
gotman 12/5/2012 | 3:04:14 PM
re: Cisco Gets Bold With Guidance Vote Bush out, get stability in this world and we will all be much richer. It's what John predicated on CNBC!

The world seems volatile, its not just the market.
btierney 12/5/2012 | 3:04:12 PM
re: Cisco Gets Bold With Guidance my take is that countries are realizing the importance of having a stable and future proof network including broadband access to stimulate economic growth, appease their populations and prosper in the world economy. This would appear to play well into Cisco since who else can you trust to build a nation wide IP network?

re: global economic stability... the US military is in over 100 countries to varying extents. You get a democrat in the whitehouse who will defund the DOD as carter and clinton did. What will happen to global stability if we have to bail from these fragile capitalistic democracies.

gotman 12/5/2012 | 3:04:12 PM
re: Cisco Gets Bold With Guidance > What will happen to global stability if we
> have to bail from these fragile capitalistic
> democracies.

Come on. Don't give me that. Your not there to create stability but to cause instability to justify you existence and protect your endless need for OIL. For one second don't think the US is creating or bringing stability to this world, its exactly the opposite, and its doing this by alienating itself as it interferes with other countries businesses and political tides.

So by being in 100 countries your not helping your economy, your keeping it hinged on geopolitics and your leaders are not given the chance to work on the economy as they have too many other distractions that demand explanations, justification and waste of tax payer $.

I might get a bite from a few readers now, maybe the wrong ones.
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