NEW YORK (AP) — Cisco Systems Inc., the world's largest maker of computer networking equipment, has been climbing back from a dip, and analysts expect it to report continued progress when it reveals earnings for the fiscal third quarter after the market closes Wednesday.
WHAT TO WATCH FOR: Cisco was coming nicely out of the recession, but hit an air pocket a year and a half ago. Competitors were nibbling at its core markets, and Cisco's approach looked scattershot.
CEO John Chambers started slashing jobs and narrowing the company's focus, a strategy that started bearing fruit late last year. Signs of recovery started appearing in the quarter that ended in October, and the quarter that ended in January confirmed them.
For investors, the celebration already appears to be over. Cisco shares climbed 60 percent from August to March, but have retreated since then, possibly on macroeconomic concerns. As a maker of big-ticket capital equipment with an international reach, Cisco is sensitive to global economic swings, and analysts will be listening for the CEO's commentary on the conference call after the earnings report.
Wedbush Morgan analyst Rohit Chopra said he was concerned about both the economy and intensifying competition, but continues to see the company as well positioned.
WHY IT MATTERS: Cisco is one of the largest technology companies. Its wide reach and sensitivity to business and government investment cycles make it something of an economic bellwether. It's a component of the Dow Jones industrial average.
WHAT'S EXPECTED: Analysts polled by FactSet expect Cisco to report earnings of 47 cents per share excluding items and the cost of stock-based compensation on revenue of $11.6 billion, at the high end of the company's own estimate of $11.4 billion to $11.6 billion.
Cisco usually provides an outlook for the new quarter. Analysts are expecting earnings of 49 cents per share on $12 billion in revenue.
LAST YEAR'S QUARTER: Cisco reported net income of $1.8 billion, or 33 cents per share, on revenue of $10.9 billion. Adjusting for unusual items and the cost of stock-based compensation, Cisco earned 42 cents per share.
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