Zacks Analyst Blog Highlights: Cisco, Microsoft, Intel, IBM and Logitech - Press Releases

For Immediate Release

Chicago, IL – May 13, 2010 – Zacks.com Analyst Blog features: Cisco Systems (CSCO), Microsoft (MSFT), Intel (INTC), IBM (IBM) and Logitech International SA (LOGI).

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Here are highlights from Wednesday’s Analyst Blog:

A Modest Beat for Cisco

Tech giant Cisco Systems (CSCO) has just posted another positive earnings surprise. Its fiscal third quarter (ended April) 2010 earnings per share (EPS) of 37 cents, on revenues of $2.2 billion, topped the Zacks Consensus Estimate by 3 cents per share. (Zacks accounts for employee stock-based compensation, whereas other firms may not.) Revenue growth increased 63% year over year.

These results are at record levels for both revenues and EPS, as pointed out by Cisco CEO John Chambers. "Our innovation and operational engines are exceeding our expectations," he went on to say, and that the company's Q3 "was probably the strongest quarter in our history."

Relative to expectations, these are typical Cisco Systems' results. Its 8.1% positive earnings surprise in Q3 follows an average earnings beat of 12.4% over the prior four quarters. In last year's Q3, Cisco reported 23 cents per share, for a 9.5% positive earnings surprise.

Cisco's results also typify current earnings season regarding other tech giants. In their March quarters, Microsoft (MSFT), Intel (INTC) and IBM (IBM) posted positive earnings surprises of 7.14%, 13.16% and 1.55%, respectively.

Analysts have generally been in agreement regarding the direction of estimate revisions over the past month, though the magnitude of adjustments has been quite mild. We have seen estimate revisions, but they have had limited, if any, impact on the Zacks Consensus estimate for this year and next.

This lack of directional momentum is reflected in the stock’s current Zacks #3 Rank (Hold), though the company does have a longer-term Outperform recommendation from Zacks Equity Research. That said, the stock is down 3.5% (94 cents) in after-market trading Wednesday.

Logitech Tops Zacks Consensus

Logitech International SA (LOGI) announced fourth-quarter revenues of $525 million, up 29% from the year-ago quarter. Earnings per share was 14 cents, exceeding the Zacks Consensus Estimate of 9 cents.

Gross margin was at 35.8%, up from 25% in the corresponding prior-year quarter and by 1.9% from the prior quarter. The year-over-year increase in gross margin was primarily due to the combination of the weaker US dollar compared with the prior year, operational efficiencies across supply chain including lower product costs as well as the benefits from higher inventory turns and faster inventory in the channel and favorable product mixtures.

Logitech’s retail sales for the fourth quarter grew by 27% year over year, with sales up by 54% in the Americas, 15% in Europe Middle East and Africa (EMEA), and 10% in Asia. Sales generated by original equipment manufacturers grew by 1%.

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