Cisco May Be Better Off Than Rivals Amid Weak IT Spending Trends

Published on May 15, 2013
by Arik Hesseldahl

cisco380-featureNetworking giant Cisco Systems will report earnings shortly, and despite the fact that IT spending around the world is being cut back, Cisco may be in a better position to weather the storm than most.

Analysts are expecting per-share earnings of 49 cents on sales of $12.2 billion. They’re also expecting Cisco to guide to 51 cents on $12.5 billion in the current quarter.

In a note to clients Monday, UBS analyst Amit Passi reiterated a “buy” rating, saying that checks with CIOs and resellers showed that Cisco might hang in there. “We think Cisco can meet or exceed consensus earnings estimates driven by improving business mix and efficiencies on the cost side,” he wrote. “Cisco‚Äôs diversified portfolio across end markets, customer types, and technologies should allow it to better weather the current storm of weak customer spending than some of its competitors.”

Even so, he’s cautious on the quarter ending in July. “We remain somewhat cautious heading into earnings this quarter in light of weaker spending trends across enterprise software, telecommunications and government customers, and recent negative data points in wireless [networks] during the month of April.”

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