Cisco seen turning things around

Two analysts upgrade stock, cite solid quarters and restructuring taking hold

The reinvention and recovery are well underway. Another Wall Street analyst expects Cisco to hit the mark this quarter, just two quarters after eliminating 12,000 jobs in a restructuring to focus back in its core routing and switching businesses.

Oppenheimer & Co. released a bulletin to investors this week that it expects Cisco to meet expectations in its current fiscal 2012 first quarter and then to "build momentum" into its second quarter, which ends in late January. The firm cites "checks" with 35 Cisco channel partners which report an improving product mix and cost cutting initiatives.

Last week, UBS upgraded Cisco from "neutral" to "buy" based on these trends and on the top management turmoil at rival HP. Oppenheimer also cites near term challenges affecting HP and Juniper as favorable trends for Cisco.  But all things considered, Cisco's realignment is making progress:

While macro headwinds persist, we feel that Cisco's new-found focus is paying off, and our contacts point to a strong quarter building for January.

Oppenheimer says channel partners are reporting balanced demand across both the US and Europe with especially strong demand in the financial market. As usual, public sector remains weak, and the healthcare vertical is also soft.  

The firm expects a strong January quarter due to US and European demand, as well as a seasonal year-end flush of IT budgets. The channel also notes that Cisco's product cycle is strong: The new Catalyst 6500 2T upgrade, and a more favorable mix of Catalyst 2000 and 3000 series switch sales.

Also, with HP undergoing leadership changes and Juniper in the midst of multiple product transitions, Oppenheimer sees further opportunities for Cisco. As for its own challenges, Cisco is turning itself around, the firm notes:

We continue to believe that Cisco is making the right moves both internally and competitively. Macro headwinds are still in play, but we feel that Cisco has managed expectations.

Separately, another familiar executive has left Cisco. Manny Rivelo, a 19-year Cisco veteran, has left the company for application acceleration rival F5, CRN reports.

Rivelo had been Cisco's senior vice president of engineering operations and systems. He will be F5's senior vice president, security and strategic solutions , and will head the company's efforts to expand deeper into security from its application delivery controller roots.

Rivelo will report to F5 President and CEO John McAdam.

Two weeks ago, we reported that Cisco's director of data center switching, Thomas Scheibe, recently left the company to head up strategic alliances at Juniper.

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