Firm upbeat on company's prospects to morph into broader IT shop
Positive enterprise and data center trends may bode well for Cisco’s upcoming Q4 results. Cisco is expected to post a 27% hike in revenue for the quarter and hit $40 billion for the full fiscal year, up 11% from fiscal 2009.
According to investment firm Ticonderoga Securities, networking and storage were two of the more upbeat markets during a downbeat Computex show in early June, which largely reflected softness in PC and consumer sales. And Ticonderoga expects OEM and tech supply chain companies to show evidence of an uptick in the enterprise and data center markets during their own earnings calls next week.
These all may point to a solid July quarter from Cisco, which reports in early August. In a bulletin, Ticonderoga wrote:
our checks continue to highlight strength in the enterprise and data center related areas (~60-65% Cisco sales). Additionally, our checks in the supply chain regarding trends at Cisco have remained constructive throughout the quarter.
Indeed, Juniper is expected to hit its targets this quarter due to strength in its enterprise business.
Ticonderoga states that even though the global economy is slowing, Cisco can weather the downturn due to its “aggressive” product launches, new initiatives and expanding market adjacencies, augmented by the three market transitions now driving the company: virtualization and consolidation of the data center; collaboration and Web 2.0; and video over the network. Ticonderoga states:
These are the types of initiatives that we believe can help the company achieve its 12-17% growth objective during a normal economic environment.
The firm says it believes Cisco is “at one of the most exciting crossroads in its history” as it morphs into a broader-based IT company with an expanded data center and consumer exposure.
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