Tech Tuesday: All About Cisco Systems & The Fed (CSCO)

Tomorrow is going to be an interesting day after a massive rally Monday.  The market is going to be looking to the FOMC for soem stability on the economic outlook and hope that Bernanke & Co. say they are carefully monitoring the slide from subprime into the rest of the economy. 

Tech stocks will potentially have to wait for the market close before hearing Cisco Systems results for the quarter and fiscal year.  Shares of Cisco barely made it into positive territory closing up $0.04 at $29.50 Monday.  If you want a full earnings preview from Friday, you can see it here.  Here are the basics if you just want the basics: $0.35 EPS and $9.29 Billion revenues.  Next quarter estimates are $0.36 EPS and $9.38 Billion in revenues.  If we get any fiscal July-2008 targets from the company, estimates are currently $1.55 EPS and $39.7 Billion in revenues.  If the company only gives guidance in percentages for fiscal 2008 you would get a static 2008 to 2007 implied 16.5% gain in EPS and a 14% gain in revenues.

Even after the drop Friday, shares are up almost 10% over the last quarter.  That $30.00 barrier is still an issue and has been difficult for the stock to hold.  Analysts on average have an average target of $32.00 to $33.00, and we gave a scenario earlier in the year for a $34.00 target mid-year that has yet to be seen.

As a reminder, the company is in that new $5 Billion share buyback plan we thought was a bit odd only two weeks ahead of earnings and this is still one of Jim Cramer’s TOP 2007 PICKS.  If Cisco upsets the market it may have additional fallout in the sector, particularly as the street thinks that they are the key leader winning more and more business in the sector.

Jon C. Ogg
August 6, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.