Cisco Systems (CSCO) touted its first-ever Internet router in space in January after testing one on an orbiting commercial satellite. But back on earth, investors are getting ready to focus on the networking-gear maker's second-quarter earnings. That report, due Wednesday at 1:30 p.m. pacific time, is expected to feature news of its first sales growth in a year and to attest to new confidence among Cisco's biggest customers in business and government.Besides its importance to Cisco's shareholders, the company's performance serves as a bellwether of spending on costly information technology infrastructure. Because of the way its second quarter overlaps January, the results of this quarter are viewed as predictive of spending in the new year too.
Analysts expect the global provider of computer networking gear to show sales growth of 3% or $9.39 billion and earnings per share of 35 cents, up from earnings per share of 32 cents on revenue of $9.1 billion in the comparable quarter last year.
"While we expect a continued recovery into next year, it is important that expectations do not get ahead of market realities," said Cisco CEO John Chambers (pictured), during the company's first quarter 2010 earnings call. "We could see economic growth bounce up and down in the next 12 months."
"For those areas that we can control or influence, we believe our vision, strategy and execution are in great shape and producing results," he said.
Cisco has been diversifying its business in 2009, with a focus on video, as evidenced by acquisitions of Tandberg ASA, a videoconferencing system maker; Pure Digital Technologies, a consumer camcorder company; and the set-top box business of China's DVN Holdings Limited. Information about the performance of those businesses could yield an early glimpse of how well that strategy is performing for the company.
Shares of the San Jose, Calif. company closed up 1.28% Tuesday, selling for $23.02 per share.
Cisco Expected to Report Improved Sales