Investors Embracing Cisco Tone So Far (CSCO)

Networking giant Cisco Systems, Inc. (NASDAQ: CSCO) has just posted its quarterly earnings for its fiscal year end 2009.  It posted $0.31 non-GAAP EPS and $8.5 billion in revenues. Thomson Reuters had the estimates pegged at $0.29 EPS and $8.52 billion in revenues. To show the difference in GAAP and non-GAAP, the GAAP figure is only $0.19 EPS.  The comments from Chambers have the shares up, although this was essentially a minimum of what we were looking to hear after its recent run-up.

CEO John Chambers said, “… We saw a number of positive signs this quarter in the economy and in our business, especially comparing our sequential quarter-over-quarter order trends.  If we continue to see these positive order trends for the next one to two quarters, we believe there is a good chance we will look back and see that the tipping point occurred in our business in Q4.”

Unfortunately, this is not very much of a commitment and is still a “pending” set-up as far as we are concerned.  The thesis seems to be that this sets Chambers up to give solid guidance ahead, but we would note that these comments and tone seem to be only a minimum of what many traders were expecting to see after shares have risen so much.

Cash flows from its operations were $2 billion for the quarter, down from $3.5 billion for the fourth quarter of fiscal 2008′ and deferred revenue was $9.4 billion.

The company said that cash and cash equivalents and investments were $35.0 billion at the end of the quarter.  As far as buybacks, the company said that it repurchased 42 million shares at an average price of $19.02 per share, for an aggregate price of $800 million.

Cisco usually holds guidance for its conference call.  Thomson Reuters has estimate of  $0.29 EPS and $8.59 billion in revenues for the next report; for fiscal 2010, estimates are $1.28 EPS and $35.94 billion in revenues.

We show an official closing bell price down 1.2% at $22.17.  Shares are trading up around $22.70 in the after-hours initial reaction and the 52-week trading range is $22.01 to $22.57.  Until the formal guidance and conference call comments are out, this should be considered unfinished business.

UPDATE at 4:19 PM EST… Shares are now trading around $22.50…

JON C. OGG