Categories Analysis, Technology

Cisco (CSCO) looks set for another strong quarter amid shift to subscription model

Cisco is scheduled to publish first-quarter 2023 results on February 15 after the market closes

For Cisco Systems Inc. (NASDAQ: CSCO), 2022 was a slightly challenging year when the business was hit by the double-whammy of pandemic and economic uncertainty. While the drop in enterprise spending due to inflationary pressures remains a concern, the tech firm looks headed for a strong year ahead, thanks to the stable demand and supply chain recovery.  

The San Jose-based network gear marker’s stock declined ahead of next week’s earnings, after staying on the recovery path for more than three months. But it is likely to change course after the earnings and gather momentum in the coming months. CSCO offers a good dividend yield of more than 3%, which makes it an attractive investment option, especially for income investors.

The Market

Over the years, the company has constantly increased its presence in the overseas market, but more than half of its revenues still come from the Americas. The fast-paced digital transformation across industries bodes well for Cisco, considering the strong adoption of its cybersecurity and subscription-based software services.


Check this space to read management/analysts’ comments on quarterly reports


From Cisco’s Q1 2023 earnings conference call:

“Our portfolio is in great shape and our business model is resilient, with 43% of our revenue now recurring, which is very important as we navigate the current macro environment. The hard work and dedicated commitment of our leadership team and employees over the last few years to transform our business model is reflected in the performance we delivered this quarter. Combined with the strength of our balance sheet and our position in the market, we have an excellent foundation for delivering long-term results.”

Cisco-Q1-2023-Earnings-Infographic

Q2 Report Due

Market watchers, on average, estimate that Cisco has generated earnings of $0.85 per share in the January quarter, which is up 1% from the prior-year period. The improvement reflects a modest increase in second-quarter revenues to about $13.43 billion. That is broadly in line with the guidance issued by the management at the last earnings. The Q2 report is expected to be released on February 15, in the evening.

In the October quarter, the main network infrastructure business, which accounts for around 50% of total revenues, performed well. The double-digit growth marked a rebound from the past quarters when business was affected by high costs, shortage of components, and supply chain issues. That, along with a 9% growth in the relatively small security division, lifted total first-quarter revenues by 6% to $14 billion. Earnings rose to $0.86 per share and came in above the consensus forecast, as they did in almost every quarter since the company started reporting results.


MSFT Earnings: Microsoft Q2 profit drops amid weak revenue growth


CSCO opened Thursday’s session slightly below $47 and traded lower throughout the session. It experienced continued volatility so far this year.

_________________________________________________________________________________________________________________

Stocks you may like:

Apple (AAPL) Stock

Microsoft (MSFT) Stock

Alphabet (GOOGL) Stock

International Business Machines Corp. (IBM) Stock

_________________________________________________________________________________________________________________

Most Popular

United Parcel Service (UPS) seems on track to regain lost strength

Cargo giant United Parcel Service, Inc. (NYSE: UPS) ended fiscal 2023 on a weak note, reporting lower revenues and profit for the fourth quarter. The company experienced a slowdown post-pandemic

IPO Alert: What to look for when Boundless Bio goes public

Boundless Bio is preparing to debut on the Nasdaq stock market this week, and become the latest addition to the list of biotech firms that have launched IPOs this year.

Nike (NKE) bets on innovation and partnerships to return to high growth

Sneaker giant Nike, Inc. (NYSE: NKE) has been going through a rough patch for some time, with sales coming under pressure from weak demand and rising competition. Post-pandemic, the company

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top