Cisco – A Mixed Bag Expectation

While the tech sector is going upside down amid a very volatile tech market, another tech giant is about to release its quarterly results. In the recent times we have seen honchos tumbling down, small time players springing up high numbers, companies and business functions facing intense competitions and some of them facing obsolescence. This time around it is the telecom giant Cisco (CSCO) who is about to come up with its Q1 FY2015 results on Wednesday, November 12.

The IT giant last announced a mixed set of Q4 FY2014 results in August, as revenues dipped marginally but the company exceeded street expectations due to stronger than expected demand for new products in developed markets. The networking honcho also saw its revenues drop year-over-year by about 1% to $12.36 billion, due to the then-ongoing slump in the emerging markets and cash crunch of its service providers which adversely affected the results. The revenue downturn hit the bottom quartile of the management guidance of 1-3% but marginally above street expectations of 2%.

The ongoing affairs

The routing and switching transition seems to be doing well since the last quarter results, and the company expects these segments to contribute considerable numbers to the top line growth in the next few quarters. Cisco expects its overall revenue growth to return to the green zone in this quarter due to its innovative strategizing and looks forward to making a positive upward movement to the tune of a bare minimum 1%. With revenues showing almost flattish movement, gross margins are however unlikely to recover in the near term since the new network product is a long time cyclic function and cannot turn the yield numbers almost immediately.

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