Cisco’s Fiscal Year Earnings on Deck (CSCO)

Cisco Systems Inc. (NASDAQ: CSCO) reports after the close on Tuesday and you can count on technology investors and traders alike to pay attention to the comments of CEO John Chambers more than they pay attention to what Ben Bernanke and friends said at the FOMC decision on rates. 

The networking giant is expected to post $0.39 EPS on $10.31 Billion inrevenues.  For next quarter, estimates are $0.40 EPS and $10.39 Billionin revenues.  This also marks the end of the fiscal year in thisreport, so if the company gives some longer-term guidance for FiscalJuly-2008 First Call has estimates pegged at $1.69 EPS on $43.71Billion in revenues.

Among the key here to watch is what Chambers says regarding the outlookfor enterprise spending and if he sounds a tad more positive than inhis last earnings conference call.  What is interesting is that therewere some Cisco executives noting some improvements starting to be seenfor later in the year, but a skeptical Wall Street has seen technologymake those comments only to see them fade away more times than can becounted.

Analysts still have an average target north of $29.00.  While shareshave recovered 7%, they have tried to signal a bottom in mid-July.If, and we do note "if" with some caveats, the company does please andWall Street decides to pile in then we want you watch for the keymoving averages.  As of Monday the 50day moving average is $23.90 (upabout 8%) and the ever-important 200-day moving average is much higherat $25.75 (up 17% from Monday).  Based on options trading, it lookslike options traders are braced for a move of roughly $1.15 in eitherdirection.

• This one kept dropping at the start of July, and we did give an explanation besides earnings woes elsewhere in the sector.
• We’ve also noted how the proposed Brocade-Foundry wants to look more and more like Cisco.

The 52-week trading range is $20.56 to $34.24, so a $21.99 close onMonday should let you know how out of favor traders have treated thisover how analysts have valued it.

• If you’d like to see Friday’s preview of this week’s "TOP 6 EARNINGS" you can see a preview for CSCO, PG, FRE, S, TWC, and SIRI.

Jon C. Ogg
August 4, 2008