Report card on Cisco's 3d quarter

Cisco gets an A- for posting a solid third quarter in the face of softness in US and European enterprise markets, and a macro US economy teetering on the edge of recession. Revenues were up 10% and slightly better than Wall Street expectations; earnings exceeded Street estimates by $.02 per share and were up 12%. Cisco tempered its guidance for the current fourth fiscal quarter – to 9% to 10% revenue growth, down from its long-term target of 12% to 17%. But Cisco is sticking to that long-term guidance with its usual cautious confidence and optimism.In specific markets and product areas, Cisco gets a B in Enterprie and a C in Service Provider. Enterprise product orders globally rose 9% but in the US, orders, excluding federal government, were only up in the mid-single digits due to the cautious environment on the overall economy. Cisco expects spending in the US to pick up by the end of the year.

In Service Provider, orders grew only 6%. In the US, they declined by 3% after 12 quarters in a row of over 20% growth. Routing gets a B. Revenues increased 14% in the quarter, driven by high-end routers, which grew 25%, and in particular the CRS-1, which grew 150%. Switching gets a C-. Revenue grew only 3%. Fixed configuration switches grew 11% but modulars declined due to the impact of customers evaluating the introduction of the Nexus 7000 data center switch.

Advanced Technologies gets a B+. This segment, which includes unified communications/collaboration, video, security and wireless, grew revenue 17%. Particularly strong were unified communications at 45%, WebEx conferencing and collaboration product at 20%, and TelePresence videoconferencing, which grew 1,000% from a very small base.

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