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What Are Cisco’s Plans for Q4?

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May. 17 2019, Published 11:43 a.m. ET

Impressive outlook

During its fiscal 2019 third-quarter earnings call, Cisco Systems (CSCO) forecast strong sales and profit guidances for the fourth quarter (which will end in July 2019), which boosted investors’ confidence in its stock. Upbeat third-quarter results and consistent spending on computer networks by corporations despite trade dispute concerns led to investors’ bullish view on the upcoming quarter.

Cisco expects its fourth-quarter sales to rise 4.5%–6.5% YoY (year-over-year), while it expects its adjusted EPS to be in the range of $0.80–$0.82. In the previous year’s quarter, Cisco’s revenue growth rate was 5.85%, while its EPS were $0.70 in the fourth quarter of fiscal 2018.

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Growth drivers

Cisco has revamped its existing products and added new software and services to boost the company’s growth momentum amid slowing demand for its routers and switches. The company is also increasingly focusing on cloud computing, which is further driving its growth.

Cisco also grew its product orders by 4% YoY in the third quarter of fiscal 2019, mainly due to a rise in security unit customers. Order growth came from the enterprise and public sectors, which saw rises of 9% and 10%, respectively. Its commercial orders also increased by 5%. However, service provider orders fell 13% in the third quarter. The company has been working for the last two years to revamp its products and make its offerings suitable for the networking and computing needs of corporations. The company has also been working to move its manufacturing locations from China to mitigate the impact of the US-China tariff hikes.

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