Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Continued Strength Expected From Cisco’s Q4 Results

cisco_signNetworking giant Cisco Systems will report its quarterly earnings tomorrow after the markets close for trading in New York. Analysts are expecting a relatively strong quarter and an upbeat outlook.

Last quarter, the company beat expectations, and CEO John Chambers cited its aim to grow steadily if slowly in an uncertain economy.

The consensus view of analysts calls for Cisco to earn 51 cents on sales of $12.4 billion, and for almost identical guidance in the quarter that ends in October.

In a note to clients yesterday, analyst Sanjiv Wadhwani of Stifel Nicolaus said Cisco’s sales through resellers are looking strong, which is a pretty good indicator of the positive tone that’s expected. “[Resellers] we spoke with saw improved spending on the enterprise side, with many reporting high-single-digit quarter-on-quarter growth,” he wrote. The results, he said, will be driven by strength in North America, where Cisco’s resellers are seeing growth of as much as 10 percent over the previous three quarters. “Overall, while there is still conservatism in spending, [resellers] are much more confident on their outlook,” he writes.

One wild card will be government spending. Cisco does a lot of business with the U.S. federal government, and there are worries that spending in that sector might be hurt by the budget sequestration. “Government spending is a big variable, with many resellers expressing caution on a budget flush due to sequestration, though we have yet to see any real evidence of a big drop-off in government spending,” Wadhwani writes.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik