Cisco’s Guidance to the Rescue

Cisco Systems (CSCO-NASDAQ) shares are surging after guidance in the conference call. Shares are now UP after being down after-hours and not by a small amount, currently back to +4.5% to $28.53.

Here is the problem with ONLY relying on past earnings result statements: companies often give guidance in their conference calls.  It is problematic when these companies hide bad guidance until later in the day, but sometimes they issue WOW guidance that the street is usually happy with.  Cisco (CSCO) has issued guidance that will be pleasing to even the skeptics.  The company is now predicting 19-20% revenue growth year over year and on an ex-S.A. basis the growth was put at 15-17%.  Now traders just have to decide if those highs from 3-years ago are going to matter.  The highs over the last year are $28.99, and as noted shares are up from a low of $17.10 in the last year.

You can imagine now that Jim Cramer will be out with his positive stance again saying that analysts will be raising numbers and targets, but we’ll let him speak his own words and see if he goes back to that $35 target.

Jon C. Ogg
February 6, 2007

So here is the post from after earnings:

Cisco Systems (CSCO-NASDAQ): $0.33 non-GAAP EPS & Revenues $8.4 Billion.
Estimates were $0.21 & $8.28+ Billion, although whisper numbers were $0.32 to $0.33 on the higher-end.  On a GAAP basis it made $0.31, so even the pickiest technology analyst would have a hard time saying this was not a meet or beat.

The stock is down almost 1% at $27.10 on the Scientific Atlanta numbers and no-guidance, but they usually give the actual guidance in the conference call.  This reaction so far is more of a trader reaction and a ‘Sell the news’ rather than based on any massive long-term expectation changes.