Cisco Q3 earnings set to improve

Although the company’s earnings per share is set to improve, there are still issues hanging over it.

The last twelve months has been rocky for Cisco Systems, as the share price has suffered from a number of aggressive drops that have created some large gaps.

The results of Cisco’s court case were unsuccessful, as its claims that an amalgamation of Skype and Microsoft would create and unfair competition were thrown out by the second highest court in Europe. This has cost the company billions and failed to halt the drop in its market share.

The last set of quarterly figures showed the company’s biggest earner, the sale of Network Switches, had fallen by over 12%. The biggest reason for this collapse is the cooling demand from China and the surrounding Asian markets.

In an effort to turn this around, the company has embarked on cost-cutting measures which hope to see the firm increase its sales up to $11.362 billion from $11.155 billion, but more importantly see pretax profits increase from $1.755 billion up to $3.178 billion.

Cisco Systems shares have almost filled the gap created when the shares collapsed overnight, after the company issued a profits warning. Seeing the shares return to $24 is the first hurdle, and to achieve more will no doubt require an improved set of figures on the 14 May.     

Cisco Systems chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by analysts