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Cisco's Earnings Beat Is A 'Good Case Of Cisco Being Cisco'

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Cisco Systems, Inc. (NASDAQ: CSCO) topped Q4 expectations and enjoyed a slight bump in after hours trading.

"I think this is just a good case of Cisco being Cisco," Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga. "Cisco did have a period, a year back, where they had a hard time meeting or beating quarters and getting their groove back, so I would say this is a really good example of Cisco being Cisco. Their growth is quite slow, but they've done a good job of steering the guidance ship."

Udall said that Cisco's revenue guidance was "actually decent."

"It is a guide higher on the revenue side," he said. "Cisco faces the same thing all the other tech companies have in that the strong dollar is hurting revenues. My guess is they have the same foreign currency headwinds. Actually, their revenue number probably would have been a great deal higher net of FX."

All in all, Udall said that Cisco delivered "solid" numbers.

"Here's the funny thing," he added. "Everybody's bar is different. If this were various other US tech companies, it probably wouldn't be up 3.66 percent. The fact that Cisco has pretty low expectations [says a lot]."

Shares of Cisco were up more than 3 percent Wednesday as of 6:00 p.m. EST. Udall expects the gains to hold unless the market freaks out Thursday.

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Global Equities Research's Trip Chowdhry was less impressed by Cisco's earnings results and subsequent stock move.

"That's hardly anything," Chowdhry said of the move. "I think the way to think about it is, Cisco is an old generation company. They are pretty much catering to the old IP environment. The new IP is very different -- it is based on the cloud fabric where routers, switches are all integrated in a very cost-effective matter in software."

Chowdhry said that Cisco does have an opportunity to succeed in the "existing IP" market. He believes it will struggle in the new market.

"The new IP requires a different set of products and different price points," he added. "Cisco will struggle to cater to these needs. It's a stagnant play. There will be hardly any revenue growth or innovation. I would consider it to be a stock that will go sideways for the next few years with a downward bias."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Latest Ratings for CSCO

DateFirmActionFromTo
May 2017Morgan StanleyUpgradesEqual-WeightOverweight
May 2017BMO CapitalDowngradesOutperformMarket Perform
Apr 2017Credit SuisseUpgradesUnderperformOutperform

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Posted-In: Global Equities Research Sean Udall Trip ChowdhryAnalyst Color Analyst Ratings Movers Tech

 

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