Cisco sales will drop over $3B this year according to analyst forecast

Cisco and RBC Capital Markets
In his research note to yours truly today, RBC Capital Markets Managing Director - Mark Sue trimmed over $3 billion in sales from his CY09 Cisco revenue forecast.

Mark Sue
According to Sue, "Cisco saw order growth decrease from +7% in August to -9% in October and is endorsing revenues to contract -5% to -10% for the January quarter. "Book to Bill was less than 1.0 and with limited visibility. We've already cut numbers but it seems we didn't cut them enough and for CY09, we're now estimating a YoY decline of -8% to $36.5B down from +5%."

Sue added, "Cisco did see a 7% QoQ increase in finished goods inventory, implying a messy supply chain correction to come. Gross margins were healthy and actually improved from 65.2% to 65.6%. Overall orders were down -3% and its broad based weakness. Negative order growth was reported in the US (-8% YoY), Europe (-mid single digits), Asia (-4%). Emerging markets didn't buck the trend (down slightly YoY). "It will take at least three-four quarters for the situation to improve in our view which means Cisco will retrench to build backlog and fix the fixable, such as its variable cost structure. To that end, Cisco has identified $1B in cost savings via involuntary attrition and other cuts." Sue concluded his note by saying, "There are some bright spots: growth in Advanced Technologies and continued new product innovation. We also think Cisco is taking a big whack to numbers so that it doesn't have to come back to do it again. Tech stocks will be challenged for a while yet Cisco's healthy cashflow, strong balance sheet and dominant market position means it may better weather the storm." The following visual presentation was sourced from the Cisco website:

Cisco Q1 FY'09 Revenue Growth
Source: Cisco Systems
Cisco Q1 FY'09 Revenue Increased 8% Y/Y
Source: Cisco Systems
Cisco Q1 FY'09 Revenue by Geography
Source: Cisco Systems
Cisco Q1 FY'09 GAAP Gross Margin by Geography
Source: Cisco Systems
Cisco Q1 FY'09 GAAP Income Statement Highlights
Source: Cisco Systems
Cisco Q1 FY'09 Key Financial Measures
Source: Cisco Systems
Cisco Q1 FY'09 Key Financial Measures
Source: Cisco Systems
Cisco Q1 FY'09 Product Highlights
Source: Cisco Systems
Cisco Q1 FY'09 Geographic Review
Source: Cisco Systems
Cisco Capital
Source: Cisco Systems Related stories: Welcome to the - Bank of Cisco Report: Cisco planning hiring freeze Cisco sees revenue, earnings hike in Q1; plans hiring freeze


How do you see Cisco faring?

Brad Reese
http://www.BradReese.Com Quotes on New Cisco Equipment One year warranty on refurbished: Cisco Aironet Cisco Power Supplies Cisco VoIP Gateways One year warranty Refurbished Cisco

  
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