Future Cisco is questionable

Will provide the preliminary bases to the report of financial year to the Cisco Systems environment, but analysts are in waiting of one more weak forecast as the company makes toilet.

On Wall Street expect that Cisco will announce the profit of the fourth quarter in the amount of $0.38 for an action at income in $10.87 billion. Unlike the last quarters, analysts do not expect big profit. Holds the indicators in the main Cisco and against the background of economic problems: new decrease, in the long term, is not excluded.

This forecast of Cisco, as expected, will reflect more and more unstable state of the economy. The key competitor of Cisco, Juniper Networks, already let know that disturbing economic expectations interfere with demand for network equipment. The CEO of Cisco John Chambers, most likely, will give the point of view on corporate demand.

According to the analyst of Wedbush company Rohit Chopra, the last results of Juniper convince more and more that macro environment for the sphere of network technologies will still remain difficult, and improvement of an environment will take much more time before significant results are received.

Despite problems, apparently, Cisco holds itself. The analyst of Sterne Agee Shaw Wu told: "Our checks supply chains from contract component manufacturers of network equipment before distribution showed that for Cisco gateway facilities (17% of revenue), new products (30%) and services (20%) the steady trend of demand, and its business on hubs (30%) is noticeable as it is represented, was a little stabilized that was helped by new strategy with a line of Catalyst 6500: the company sells updates for network interface cards instead of absolutely new systems. In terms of geography, we selected the atmosphere better: in the USA and Canada (53%), in emerging markets (12%), and the Pacific Rim (15%) compensated multidirectional dynamics in Europe (20%)".

In general analysts agreed that the product demand of the enterprise looks solidly.

According to the analyst of Jefferies George Notter, in the last several months article of corporate expenses, including Cisco companies, makes about 60% of sales volume. Will provide more detailed information on the happening restructuring in further Cisco. Analysts say that its plans will be both the front and the center. "The company was not engaged in restructuring that is necessary, in our opinion yet. We consider that in its business there is a considerable inertia, and perspectives can still worsen", - Notter told.

Among other factors analysts note:

Expenses in a public sector will be low. Revenues of Cisco in this sector are about 20% of total sales, and a half of these sales are the share of federal IT budgets.

Competition. If corporate business of Cisco is stabilized what it will mean to HP? The threat of HP at the front of hubs will not be.

Gross profit. If Cisco manages cost therein, then the gross profit can decrease, analysts say.

Market development. Joint work, wireless networks and data processing centers are engines of future growth for the company. Analysts will watch closely it.