There's really not a lot to like about Cisco's (Nasdaq: CSCO) Q4 earnings statement and its cautious revenue forecast. Cisco's fiscal Q4 ended July 31 results of $10.8 billion, while 27 percent above last year's results, slightly missed analyst's expectations of $10.9 billion.
But what's troubling financial analysts and Wall Street even more is Cisco CEO John Chambers' cautious outlook. Analysts and investors alike were expecting that Cisco would report an uptick in sales as service provider's upgrade their respective networks to keep up with growing Internet-based applications.
"We are seeing a large number of mixed signals in both the market and from our customers' expectations, and we think the words 'unusual uncertainty' are an accurate description of what is occurring," Chambers told analysts on Wednesday.
Not surprisingly, investors did not like this outlook and punished Cisco by sending its share price down 8 percent in after-hours trading. The router giant forecast that revenue would increase 18-20 percent over 2009, which fell short of average analyst estimates of 21 percent to $10.95 billion.
Chambers attributed the cautious outlook to a dip in sales in late June and European debt issues, but added that business started to pick up at the end of fiscal Q4. Unfortunately, the sales uptick did not happen quickly enough. "He certainly sent investors mixed signals. But overall, it looks like orders ramped up towards the end of the quarter but weren't strong enough to give the guidance that people were looking for," said Bill Choi, analyst at Jefferies & Co.
One potential bright spot that could contribute to further growth was that Cisco was picked as one of AT&T's three IP/MPLS, Ethernet and Evolved Packet Core equipment domain suppliers alongside rivals Alcatel-Lucent (NYSE: ALU) and Juniper (NYSE: JNPR). Although making it onto AT&T's domain supplier list does not necessarily mean instant sales, it does give Cisco a chance to better compete for future IP-based voice, video and data traffic upgrades.
For more:
- see the earnings release here
- Reuters has this article
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