Cisco's first quarter earnings are expected to show an improving outlook for enterprise spending and further gains in the data center.
Overall, Cisco should deliver a strong quarter. Wall Street is expecting earnings of 40 cents a share on revenue of $10.74 billion
A few items to watch going into the quarter:
- Anecdotal evidence from the likes of NetApp indicate that Cisco's Unified Computing System is gaining traction as well as video conferencing. The UCS effort seems to be going well. Stifel Nicolaus analyst Sanjiv Wadhwani said:
Our checks show that the company’s service provider, government and data center businesses tracked well during the quarter. In fact, we believe that the UCS is on track to hit $500 million by year-end and at least $1 billion by 2011.
- The outlook for the next quarter. IT spending is expected to show moderate---but uneven gains. International demand looks solid. Wunderlich Securities analyst Matthew Robison said:
While checks suggest the channel may be a bit stronger domestically than it was when the company last reported or at the time of the analyst meeting (mid-September), we do not expect the U.S. to have kept up with European, Emerging Market or Asia Pacific demand, except with mobile network service providers.
- The demand picture for core routing and switching. Wedbush analyst Rohit Chopra said:
Contacts indicated improved order activity as the quarter progressed with strong spending from financial services, technology and health care verticals citing some momentum in switching. We also heard that the company has been more aggressive in the edge switching market with heavy marketing of new products and discounting to reclaim some of the lost market share and to match some aggressive promotions by competitors. In addition, we believe routing orders decelerated somewhat, as we anticipated in our model, after several strong quarters.