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Analyst Blog

Cisco Systems (CSCO - Analyst Report) reported fourth quarter numbers after the bell today.  EPS came in at $0.49 verse Zacks Consensus Estimate of $0.47, and Revenues of $12.42 billion, slightly beat the Zacks Estimate. 

According to Zacks Expected Surprise Predictor (ESP), there has been a 100% positive analysts agreement over the past 60 days, and four consecutive quarters with an average positive surprise of 6.52% (the fourth quarter being a positive 4.26% surprise).  Therefore, the ESP model indicated a small but positive surprise for the fourth quarter 2013.

The street was concerned with Juniper Networks (JNPR - Analyst Report), and Hewlett Packard (HPQ - Analyst Report), and their recent price discounting.  Analysts were worried that the new promotions would cut into Cisco’s margins.  Cisco was able to deflect this competition by offering discounts; Catalysts Switch Promo, UCS discount for new users, and WAN Optimization to name a few. 

Chairman and CEO John Chambers stated that, “My confidence in our ability to be the #1 IT Company is increasing. Our fourth quarter was a record on many fronts, with record revenue, and record non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share. In every case, we exceeded the midpoint of our guidance. We also generated $4 billion in operating cash flow in the quarter, another record.”

While the Chairman might be high on his company, the street is actually disappointed with the results.  In afterhours trading, CSCO is down over 4%.  Yet, Mr. Chambers did later concede (during analyst’s conference call) that his company is amidst, “what continues to be a challenging and inconsistent global macroeconomic environment."  Moreover, the CEO stated that he did not see this changing anytime in the short term. 

Zacks Investment Research will post a detailed earnings report tomorrow morning.