Cisco Boosts Earnings & Dividend (CSCO)

Cisco Systems, Inc. (NASDAQ: CSCO) reported earnings growth of 43% to $2.18 billion or $0.40 EPS net but the non-GAAP report followed by analysts was $0.47 EPS.    Revenues rose by 11% to $11.5 billion.  Thomson Reuters had consensus estimates of $0.43 EPS and $11.23 billion in sales.

Dividend investors will be happy as the $0.06 dividend is now a $0.08 dividend after the firm raised the payout today.

Cisco trades at an implied 11.4-times current year earnings estimates, and maybe even a tad less if you factor in the wasted billions used for share buybacks.

We were worried about margin contraction despite the lower SG&A costs as Cisco tries to win more business against competition.  That just did not come about: gross margin rose to 61.3% from 60.2% and the cost of sales rose by more than 7%.  Cisco had given a forecast of 61.5% to 62.0% for the quarter.

Guidance will come in the conference call.  If John Chambers is going to disappoint, it sure did not sound like it when he was speaking with Maria Bartoromo on CNBC.  For the quarter we are already in, the estimates are $0.45 EPS and $11.46 billion in revenues.  For the July year-end, the estimates are $1.77 EPS and $45.83 billion in revenues.

Cisco shares closed up 1.1% at $20.43 and the after-hours reaction has shares up 2.6% at $20.96.  Its 52-week trading range is $13.30 to $22.15.

JON C. OGG