What to expect when economic bellwether Cisco reports quarterly results

Published Tue, Nov 15 20224:14 PM EST

Club holding Cisco Systems (CSCO) is set to report fiscal first-quarter earnings after the closing bell on Wednesday, and we'll be looking to see how the technology conglomerate has weathered gathering economic headwinds. Cisco, whose product offerings include networking hardware, software and telecommunications equipment, has long been considered an economic bellwether that sources a consistent revenue stream from a diverse set of industries including retail, health care, financial services and government. Analysts expect earnings-per-share to come in at 84 cents, up 2.4% from last year, while total revenue should climb 3.2% year-over-year, to $13.31 billion, according to estimates from Refinitiv. Here are the top 4 factors we're looking out for ahead of the print. Supply chain Analysts and investors will be closely monitoring Cisco's supply chain execution. This has been a chronic headwind for the company that has been exacerbated by China's ongoing Covid-19 restrictions, resulting in shortages of critical components. "There has been some degree of improvement in the component supply chain, however, CSCO still continues to see some of the most extended lead times for components among any other networking supplier," analysts at Loop Capital wrote in a note. Still, any further improvements could mean more upside to Cisco's first-quarter results. Enterprise spending Demand from enterprise customers has been holding up this year, despite the challenging global economic backdrop. And those "solid demand trends" look set to continue, according to Loop Capital. "Our recent checks and industry conversations highlight a strong demand outlook for CSCO's networking solutions within the Enterprise sector," the analysts wrote in a research note Tuesday. At the same time, as the economy slows, companies have become more cautious on how they allocate corporate funds. At the Club, we'll be looking to hear from management on whether Cisco's customers have reined in their budgets. Product orders Resilient demand for Cisco's products is reflected in its orders and backlog. And the company ended its 2022 fiscal year with a record backlog, providing it with greater visibility on future revenue potential. In addition, Cisco's remaining performance obligations (RPO), which represent its future contracted revenue recognized over the next 12 months, was more than $31 billion, with 54% revenue for the coming year. While total product orders fell 6% in the fourth quarter , this was up against tough comparables on last year's unexpected 31% growth in orders. Nevertheless, we'll be looking for signs of accelerating product order growth. "Cisco needs to address share losses across its most important segments and address its ability to innovate and attract talent for its growth segments," analysts at Bank of America wrote in a note Tuesday. Transition from hardware to soft