Channel checks show strong first half of fiscal 2011 but competition from HP and Juniper could eat into switching share
Cisco’s sales for its fiscal first quarter, which ended last month, are tracking ahead of expectations, according to a bulletin from Oppenheimer & Co. Citing data from 36 channel “contacts” in the US and Europe, Oppenheimer states that the current second quarter is also looking positive for Cisco.
Cisco reports its Q1 fiscal 2011 results on Nov. 10. The company guided to a Q1 flat to down 2% from Q4, which disappointed analysts.
Based on the channel checks, Oppenheimer is raising its estimates for Cisco but is nonetheless cautious on its core routing and switching business, which faces increasing competition from HP and Juniper. Oppenheimer notes the “likelihood” of decelerating growth for Cisco in the second half of fiscal 2011 and in fiscal 2012 because of it.
Strength in the first quarter, meanwhile, is due to seasonal growth in the government and public sector verticals, as well as financial and retail, Oppenheimer notes. Q2 will be driven by IT budget flushes and ongoing upgrade activity, and almost half of Oppenheimer’s contacts believe sequential growth will be 5% or better in the second quarter.
Product delays due to component supply shortages have virtually ended, the firm notes; and traction for Cisco’s Unified Computing System also “appears to be building” in the channel. Yet HP and Juniper are presenting stiff competition, particularly in switching, and Oppenheimer believes Cisco is likely to lose share in the market in calendar 2011.
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