Cisco Spikes 6% After Earnings

Cisco CSCO is up more than six percent this morning after the company reported that its fiscal first-quarter revenue came in at $11.9 billion (an increase of six percent year over year), beating the analyst consensus of $11.78 billion. Net income arrived at $2.6 billion -- an increase of 11 percent year over year -- with an EPS of $0.48. "We delivered record results this quarter -- with revenue growth of 6 percent and strong earnings per share growth -- demonstrating our vision and strategy are working," John Chambers, Chairman and CEO, said in a company release. "Our innovation engine, operational discipline and on-going evolution are enabling us to differentiate in the market." Chambers also spoke about the company's transition to cloud mobility and video. In October, Cisco announced that it had extended its partnership with Citrix CTXS to include networking, cloud and mobility. Despite the emphasis on cloud computing, Chambers said that he believes "the largest market transition lies ahead of us, as the Internet of Everything becomes a reality." Cisco also formed a satellite service alliance with Inmarsat. The long-term alliance will allow Cisco to provide Inmarsat with a state-of-the-art satellite applications service delivery platform and a high-performance access network for Inmarsat's Global Xpress program. Not all of Cisco's partnerships have been as fruitful. On October 8, the firm announced that it would end its sales agreement with ZTE Corp ZTCOY after the company sold Cisco's computer and telecommunications equipment to Iran. In doing so, ZTE violated U.S. sanctions, forcing Cisco to take action. In the days leading up to Cisco's earnings release, analysts were somewhat skeptical of the company's future. J.P. Morgan downgraded the stock to Neutral and lowered its PT from $21 to $17. The researcher argued that while J.P. Morgan is not making a call on the firm's first-quarter results, "[we] do believe FQ2'13 guidance is likely to disappoint and expect 2013 to be a tough year as macro pressures persist (weak enterprise and government spending, Europe, etc.)." Cantor Fitzgerald downgraded Cisco from Buy to Hold and lowered its PT from $20.50 to $19.50. Now that the company's first-quarter results have surpassed expectations, Deutsche Bank has raised its PT from $21 to $22. Deutsche Bank referred to Cisco as a "fundamentally sound business" and said that the "inline Q1 guide ($12.05B / $0.47 on the mid point); B/B below 1.0x is indicative of gradually improving IT spending trends, heading into CY13." BMO Capital Markets, which said that Cisco "defied expectations and delivered a solid quarter and marginally better guidance," reiterated its Outperform rating on the stock. Follow me @LouisBedigianBZ