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

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