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Cisco To Determine Tech's Success

Tuesday, 3 Feb 2009 | 6:15 PM ET

Investors are eager to hear quarterly results from Cisco , Wednesday after the bell. Will the tech titan validate the recent strength in sector?

As you may know Cisco is the world’s largest maker of computer networking hardware. (Things like routers) Investors often pour over the results from this company; not only to see how Cisco is performing, but as a way to gauge the overall strength of corporate tech spending.

The firm seemed to be weathering the economic storm fairly well until early November, when it suddenly slashed its forecasts. Since then, the economic outlook has deteriorated further, and analysts have cut their Cisco estimates.

Brent Bracelin, Pacific Crest analyst tells Fast Money he’s bullish on Cisco long-term, but in the short term he’s got some concerns.

“IT hardware fundamentals appear to be deteriorating faster than expected” and Cisco has a great deal of exposure to this part of the market, specifically to “the decline in router/switch orders.”

In other words, don’t expect to hear great things from the quarter. “I wouldn’t look for the Cisco report to rally the tech space either,” he adds.

And for what it's worth smaller competitor Juniper Networks last week reported fourth-quarter results at the lower end of its guidance, and gave a disappointing forecast for the current quarter.

What do you think? We want to know!










What’s the trade?

“Clearly Cisco is one of the better names in technology, but the expectation are probably too high for earnings, says Bracelin. “However, if the stock dips below $15, it’s a buy long-term.”

And in case you're wondering before the show Bracelin told our producers in the IT Hardware Sector his favorite names are EMC and F5 Networks .

CSCO Earnings Preview
Debating whether earnings will validate recent tech strength, with Brent Bracelin, Pacific Crest analyst and the Fast Money guys.



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