Optical/IP Networks

What's Next? Cisco, of Course

Could the IP routing market stand any more cheering on this week? Apparently.

In perhaps the most obvious case of connect-the-dots, it appears that much of the telecom world now expects Cisco Systems Inc. (Nasdaq: CSCO) to have an exciting quarter, based on Juniper's solid results and the investment community's rousing response (see Juniper Confidently Carries Q4 and En Fuego!).

In a curious twist, even Scott Kriens, the CEO of Juniper Networks Inc. (Nasdaq: JNPR), Cisco's largest rival, said in the quarterly conference call Thursday night that the strength he saw in the market was likely to translate into a good quarter for Cisco.

Cisco is continuing to make headway with sales to telecom carriers, according to a research note today by UBS Investment Research analyst Nikos Theodosopoulos.

The analyst didn't name any of the purchasing carriers, but he wrote that his channel checks suggest Cisco will haul in about $51 million more in quarterly revenues than he'd previously projected. His revised estimate has Cisco earning 18 cents a share on revenues of $5.356 billion in the current quarter, compared to the previous estimate, which had Cisco earning 17 cents a share on revenues of $5.305 billion.

"We estimate that sales to telecom carriers (25 percent of total sales) are tracking up 10 percent to 15 percent sequentially and sales to enterprises (75 percent of total sales) up 2 percent to 4 percent," wrote Theodosopoulos.

Cisco's position is improving with carriers, and that's noteworthy but not surprising, given how its competitors have fared in the past three months. Juniper trounced its quarterly revenue expectations by $25 million (see Juniper Confidently Carries Q4); Procket Networks Inc. bagged $30 million in new funding (see Procket Stuffing Its Pocket); and Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) finally found a prom date (see Avici, Nortel Get 'Strategic').

Cisco is set to announce its results for its second fiscal quarter of 2004 on February 3. Theodosopoulos's numbers are slightly higher than what analysts are expecting from Cisco, on average, for the current quarter. Analysts surveyed by Reuters show Cisco earning about 17 cents a share on revenues of $5.275 billion.

Most telecom-related stocks had a banner day (see En Fuego!), and Cisco shares climbed $1.97 (7.25%) to $29.13.

— Phil Harvey, Senior Editor, Light Reading

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