Cisco Systems, Inc. (NASDAQ:CSCO) has boosted its longer-term growth expectations, and shares are now up 6% in after-hours as Chambers is finishing up his comments.  Obviously the company can make other comments, but this stock is now above $31.00.  That is a multi-year high and may put part of that $30.00 in the past if the market allows it.  This may play into the scanrio that we felt could take this to a $34.00 summer target, and this is showing why Jim Cramer named it his #3 growth Pick out of his Top Picks for 2007.  The networking behemoth posted $0.36 EPS on $9.43 Billion in revenues.  First Call estimates were $0.35 EPS and $9.29 Billion revenues.

Opening Commentary (partial) from Chairman & CEO John Chambers: to maintain a strong growth rate is the initial comments, and stock ticked up there… strongest quarter in balanced sales in products, record quarter in sales and EPS… book to bill was above 1… repurchased $1.5 Billion in stock… Year over Year revenues growth: routing grew 14%, switching 18%, total advance technology grew 24%…. competition is robust but they believe they are taking market share in all areas… 17 of top 20 product families grew at 15% or better, services is 16% of revenues…. Chambers said the US business was strong and balanced despite perceived slowdown in technology… service provider business was very strong… saw acceleration in video and these will need continual network upgrades and grow that exponentially… wants to lead Web 2.0 technologies (he went on and on talking up Telepresence)… Best indication is order growth in high-end routers, and it saw accelerated growth of almost 30% in Q4 in high-end routers… believes it can continue growth… network is becoming the platform… convergence is winning… continues on acquisitions and partnerships… understands where industry is going over 12-18 months and then 3-5 year strategy… Growth over next decade will be second major phase of Internet from Web 2.0 and unified communications… says this can be instant replay of what happened for Cisco in early 1990’s.

The company said it is increasing expectations for next year but not focusing on short-term.  Chambers raised longer-term guidance to 12-17% from 10-15% range previously given.  Sees 2008 now 13-16% and revenue guidance for next quarter is 9.45 to $9.55 Billion (versus $9.38 Billion estimates). 

This was also the fiscal year-end, so at $1.34 non-GAAP EPS and a $29.69 close the stock has a trailing P/E ratio (non-GAAP of course) of 22.15.  With a GAAP EPS of $1.17 for the fiscal 2007 report, this has a trailing P/E of 25.3 for those who wish to be technical and use this on a comparable basis to many of the S&P 500 companies.

As a reminder, the company can always make some comments that change gains in after-hours.  But the initial reaction is not showing this.

Jon C. Ogg
August 7, 2007

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

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