Cisco fiscal 4th-qtr results take time machine back to before recession

Earnings Preview: Cisco results back to 2008’s

NEW YORK — Cisco Systems Inc., the world’s largest maker of computer networking equipment, reports its fiscal fourth-quarter results after the stock market closes Wednesday.

WHAT TO WATCH FOR: As a maker of big-ticket capital equipment, Cisco’s sales were hit hard by the recession. It has seen business come roaring back this year, recovering to pre-recession levels as corporations have regained their confidence and started catching up on delayed upgrades.

Comparisons over last year will look strong for a while — last quarter, revenue rose 27 percent — but will start leveling out soon, the company says.

Cisco’s high profit margins allowed it to keep posting profits during the downturn, but it did tighten its belt and lay off about 2,000 people.

Last quarter, Cisco completed the acquisition of Tandberg SA, a Norwegian company that’s a leading maker of corporate teleconferencing gear. This quarter will be the first to include Tandberg’s results for the whole period. UBS analyst Nikos Theodosopoulos expects it to add about 2 percent to Cisco’s sales compared to the quarter that ended in May.

The third fiscal quarter also had an extra week compared to the second quarter, which will hold back the revenue comparison by 2 percent to 3 percent, Theodosopoulos estimates.

WHY IT MATTERS: Cisco’s sales are seen as bellwether of technology spending by large corporations, government agencies and telecommunications service providers. This isn’t just because Cisco is the biggest: its fiscal quarter ends nearly a month after most other companies (July 31, in this case).

Cisco hired a net 1,000 people in the last quarter, and CEO John Chambers said he expects the pace of hiring to speed up. Cisco had about 67,000 employees at the beginning of the latest quarter.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect Cisco to earn 42 cents per share, on sales of $10.86 billion. Cisco has said it expects between $10.67 billion and $10.92 billion in revenue.

LAST YEAR’S QUARTER: Cisco reported net income of 19 cents per share on revenue of $8.5 billion.