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Wednesday, February 4, 2009

Cisco 2Q:2009 conference call comments

. After a whole lot of telling us how great their product positioning is, Chambers gets around to lowering guidance.  7.86 – 8.35 bil for next quarter, which is below the consensus and the worst case scenarios out there.  Directionally not a surprise but certainly more conservative than people expected.  His commentary about orders was rather alarming:  down 9% in November, down 11% in December, down 20% in January – things are getting worse as the economic slump spreads globally.  All geographies were weaker.

Stock reaction is almost always a jump ball.  Figure you’ve got numbers coming down again, that long-term economic forecast of 12-17% is still out there – which is dumb – they should bring that down and get it out of the way.  What is the point of having a forecast like that out there?  Cisco is not excessively expensive relative to its long-term growth rate (oh yeah, that’s why they have that forecast out there!).

At $14-15 its a coin flip.  Admittedly, its a coin that you can probably stick in your pocket for 5 years without worrying it’ll disappear.

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