Analyst conference should stress longer-term opportunities, not near-term concerns
All industry eyes and ears will be on Cisco tomorrow – Sept. 14 – as the company hosts its annual analyst conference. Watchers will look for indications on the outlook for the industry following Cisco’s sobering Q1 guidance.
But those expecting to hear bright, sunny near-term optimism might be disappointed. Analysts like Brian White of Ticonderoga Securities are anticipating a cautious tone from Cisco with an emphasis on longer-term prospects. In a bulletin on the upcoming meeting, White wrote:
We believe Cisco will maintain its revenue growth objective of 12-17% (3-5 year objective) but will emphasize that this target applies to normal economic times and not down cycles. During last year’s meeting, Cisco expanded its addressable market opportunity to $138 billion from $89 billion and we expect the company’s opportunity will continue to grow as new markets are pursued.
White also expects Cisco to face questions on the competitive landscape, particularly among data center combatants like IBM, HP, Dell and Oracle. HP has been especially aggressive of late, outbidding Dell for 3Par and this week acquiring enterprise security player ArcSight for $1.5 billion.
The deals may not be done, according to White:
HP’s growing push into the networking space through both organic initiatives and the 3Com acquisition remains on the minds of investors, while we believe Oracle will move into the networking space and the acquisition of a small, privately-held, company could make sense.
One thing analysts can bank on from the conference is Cisco’s reaffirmation of its intent to be a leading IT player, not just a networking mainstay. In this effort, expect to hear much about longer term opportunities, strategic market adjacencies, and other Cisco initiatives. White is:
Cisco’s transformation theme should be a key takeaway during tomorrow’s meeting. The meeting should also provide (watchers) a better appreciation of longer-term, mega trends, including cloud computing, Smart Grid and Smart+Connected Communities that we view as significant for Cisco.
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