Game Plan: Cisco Earnings (CSCO, JNPR, NT)

Cisco Systems Inc. (NASDAQ: CSCO) is set to report earnings on Wednesday after the close.  What is interesting is that the news is expected to be dismal and the guidance is expected to be worse, yet many traders have been trying to use the current low prices to accumulate shares. 

If it seems a bit early in February to get Cisco earnings, it isbecause the quarter ended on January 24.  Here are the estimates fromThomson Reuters (First Call):

• For the past quarter due tomorrow, estimates are $0.30 EPS and $9 billion in revenue.
• The current quarter is expected to end with earnings of $0.29 EPS and $8.75 billion in revenue. 
• For the fiscal period ending July, 2009, estimates are $1.34 EPS and $37.15 billion in revenue.

This morning was a pre-earnings upgrade from Stifel Nicolaus to "buy"from "hold."  And AmTech Cut it last month to "neutral" from "buy."

We will give much more detail chart analysis, options expectations, and other color in our preview tomorrow.

We also saw Juniper Networks (NASDAQ: JNPR) get hit rather hard lastweek after giving cautious guidance.  Itlooks down more than 20% since its report last week. 

For whatever it is worth, Nortel Networks (NYSE: NT) was a dead competitor long before it filed for bankruptcy protection.

Keep in mind that these estimates may change slightly between now andtomorrow’s formal earnings report.  We will give a more detailedpreview tomorrow.

Our take is that if the company can convince Wall Streetthat it sees some light rays of hope for a recovery after this summer, than traders will jump on the stock. We think this is avery tough sell and would find it odd that even Cisco can buck theentire tech and telecom trend by making too aggressive of statementsfor what lies beyond summer.  It’s possible and the company has pulleda rabbit out of the hat before.  We just think it is still too soon.But the good news is that the stock could easily rally as long as theresults and guidance are just not atrociously worse than what analystsare looking for.

Jon C. Ogg
February 3, 2009