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Cisco Q3: Best. Quarter. Ever.

Analysts were expecting Cisco Systems Inc. (Nasdaq: CSCO) to report upbeat third-quarter earnings, and the company didn't disappoint.

The third quarter, which ended May 1, happened to have an extra week in it -- an anomaly that pops up every five or six years, CEO John Chambers said on the company's earnings call this afternoon.

Even so, Chambers called it "the strongest across-the-board quarter in our history" and said it validated his contention that Cisco could exploit a recession to strengthen its position.

"We emerged from this downturn gaining market share, a larger share of the total wallet spend of our customers, dramatically improved customer relations as a trusted technology and business partner, and having next-generation products in almost every product category," he said.

Table 1: Cisco Q3 Results
3Q09 3Q10 Change (%)
Revenues ($B) 8.2 10.4 27%
Net Income ($B) 1.8 2.2 25%
EPS ($, GAAP) 0.23 0.37 61%
Share Price ($) 19.61 26.74 36%
Source: Cisco, Yahoo Finance.
3Q09 share price is as of May 6, 2009




Coming off an admittedly weak year, order growth was 25 percent or better from the previous year in every sector -- routers, switches, advanced technologies, and consumer products. Overall, Cisco officials said they expect fiscal 2010, which ends in July, to see sales 25 to 28 percent higher than fiscal 2009.

Analysts had expected non-GAAP earnings per share of 39 cents; Cisco reported 42 cents.

Now the punchline: Analysts had warned that Cisco's stock might not react well even to good news, with investors having already built up expectations for a blowout quarter. It looks as if that's happening: Cisco shares were down 29 cents (1%) at $26.55 in early after-hours trading.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 4:36:27 PM
re: Cisco Q3: Best. Quarter. Ever.

Note that the headline refers to Chambers' description, not mine.  It's probably not the best quarter by any company of all time -- just a really nice one after a really bad year.


I'm having trouble reconciling that 25-28% growth figure - I must be doing the math wrong, or using figures that don't count Tandberg properly, because it seems to imply a $16B Q4. 

Tom-Andrew 12/5/2012 | 4:36:23 PM
re: Cisco Q3: Best. Quarter. Ever.

I come up with 4Q10 at $10.9B based on +5% over 3Q10.  4Q09 was $8.5B so using +25% to +28% yr/yr 4Q10 should be $10.6B - $10.9B.   

netsalesman 12/5/2012 | 4:36:16 PM
re: Cisco Q3: Best. Quarter. Ever.



<div style="color: #000000; font-family: Verdana, Arial, Helvetica, sans-serif; font-size: 10px; background-image: initial; background-repeat: initial; background-attachment: initial; background-color: #ffffff; background-position: initial initial; margin: 8px;">

Cisco Q3: Best. Quarter. Ever&nbsp;(my note:&nbsp;in CISCO's history).


Craig, I think the growth figure is intended &nbsp;Y over Y not Q/Q, then maybe you can reconcile the numbers with the % guideline.&nbsp;


As with Tandberg, the acquisition closed at the end of March: being an around $800M revenue company, if ever the balance sheet includes the month (april) that is within the CISCO's Q3 I doubt that would change much.&nbsp;


&nbsp;


The very disappointing thing is seeing how the shares reacted. I understand expectations: but the company posted a record revenue/profit quarter, has 10+ billion (yes, Billion) cash and the shares falls like it's going bankrupt. I understand the share value is made up of a good part of 'future growth' but I have the feeling whatever the results, the market has an independent response.


&nbsp;


P.s. I edited the post after posting it to minize the font...but haven't been able to do it, any hint ?

</div>

&nbsp;

Pete Baldwin 12/5/2012 | 4:36:13 PM
re: Cisco Q3: Best. Quarter. Ever.

Thanks guys.&nbsp; That sounds a lot more reasonable.&nbsp; (I *was* doing y/y, so there must be some other mistake... maybe I was looking at calendar quarters not fiscal? Eh, doesn't matter now.)


Regarding the stock price -- it's become basically a game unrelated to the company performance, hasn't it?&nbsp; Stock runs up ahead of earnings because everybody expects everybody else to run up the stock; stock drops afterwards because everybody expects everybody else to cash in after running up the stock.


I don't know if that's exactly what happens, but that's how I've been viewing Cisco and Juniper's results lately.


Oh, and about the font -- 'fraid I can't help you.... in fact, I was going to ask you how to get the big font. Looks nice and authoritative.

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