Just a few hours to go now before Cisco reports and to say there's a nervous tension on Wall Street right now anticipating the news is a deep understatement. It's palpable. I've spent a chunk of the morning calling investors and culling reaction: "nervous" comes up a lot.
This isn't so much about the 38 cent consensus EPS or the $9.8 billion in revenue expected; it's far more about the guidance and the macro-economic comments that John Chambers will share about the global economy. I hope he got a good night's rest; isn't suffering jet lag; had a good breakfast and is walking the halls with a bounce in his step. Because believe it or not, his mood and language he uses will be as important to Cisco's earnings as the earnings themselves.
And as Cisco goes, so goes....?
Cisco got slammed when it failed to raise full year revenue growth guidance the last time around. Now, there's a strong hope that at the very least, Cisco this time around will re-affirm the 13 percent to 16 percent full year growth for 2008. Anything less could be devastating.
For the current quarter, 39 cents and $10.1 billion; $10.6 billion in revenue for the fourth quarter; $40.1 billion for the full year. Those are the keys.
I'm told analysts are also expecting a book-to-bill ratio of 1 or slightly below; more would be an enormous positive pointing to surprising strength in new orders. Less will indicate recession worries are front and center and that Cisco customers are beginning to push out new orders as they wait for the economic dust to settle.
There will also be a fair amount of attention paid to Cisco's European business. Many analysts I'm talking to are looking to that region to offset any slowdown that might be happening, or unfolding, domestically. Softness there could also be a big problem.