Cisco Beats Wall Street Expectations Handily
According to an article on CNBC, Cisco (NASDAQ: CSCO) posted better-than-expected Q3 earnings of $0.42 a share, while analysts expected around $0.39 a share. More importantly, CSCO beat the revenue estimates by garnering nearly $10.4 billion, while the expectations stood at $10.23 billion. The company reported non-GAAP gross margins of 65.2%, ahead of Wall Street projections of 64.9% and Intel’s (NASDAQ: INTC) 65%.
Cisco has $39.1 billion in total cash, slightly down from $39.6 billion in Q2, but sharply up from $35 billion recorded at the end of fiscal 2009. This is of great significance as the company’s acquisition of Tandberg closed during Q3, indicating that the deal didn’t affect CSCO’s cash position much.
According to the company’s CEO John Chambers, Q3 was "outstanding" and the company actually exited the recession with larger market share and stronger.
A lot of M&A activity can be witnessed on the market forefront these days. The acquisition of Palm (NASDAQ: PALM) by Hewlett-Packard (NYSE: HPQ) for over $1 billion has been in the news lately. The most recent news is of SAP (NYSE: SAP) buying Sybase (NYSE: SY) for over $6 billion. With the huge amount of idle cash on companies’ balance sheets and improving trends of the economy, signs of big technology giants getting into an acquisition spree are beginning to appear. IBM (NYSE: IBM) has announced that it will spend $20 billion over the next five years on deals. Sources suggest that Cisco has also climbed into the acquisition trail.
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