Cisco to remain aggressive in 2010

Company expected to build on generous financing, M&A, cash position

Cisco is expected to remain aggressive in 2010 as it looks to take back lost market share. The company will build on its generous financing for SMBs, continue to set the industry pace in mergers and acquisitions, and leverage its formidable cash position - greater than $20 billion post- Tandberg and Starent acquisitions - in an effort to pull away from competitors, according to investment firm UBS. 

Cisco recently announced a three-year, 0% financing incentive for SMBs in the US. The financing offer applies to all Cisco products and services from $1,000 up to $250,000. It is available through Cisco Certified Partners until July 31. 

Cisco also said it would, in 2010, maintain its pace of mergers and acquisitions. It acquired six companies last year, four of which were purchased between May 2009 and the end of the year. They included Tandberg ($3.4 billion), Starent ($2.9 billion), and Pure Digital ($590 million). 

It helped that Cisco had, at that time, $30 billion in cash. It helps that over $20 billion of that remains, according to UBS estimates. 

All of this has UBS expecting in-line or better results from Cisco for its second quarter of fiscal 2010, which it reports tomorrow. The Street is expecting revenue of $9.4 billion and earnings of $.35 per share; UBS expects slightly better revenue -- $9.41 billion - and slightly less EPS: $.34. 

Results will be driven by strength in US service provider and enterprise sales, and improved IT spending overall. UBS expects Cisco to end fiscal 2010 with $38.4 billion in sales, and fiscal 2011 with $43.5 billion. Starent will contribute $220 million and $452 million, respectively, according to UBS estimates.

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