Cisco ha proprio deluso - gz
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By: GZ on Mercoledì 11 Agosto 2004 12:11
Morale: in effetti Cisco mostra che ci sono segni di rallentamento di domanda nel suo settore, le stime le rispetta, ma dopo quattro trimestri in cui accellerava ora rallenta il ritmo
Cisco Earnings Call -- 4:30 p.m.
8/10/04 7:10 AM EDT
Jordan Kahn analyzes the Cisco earnings call at 4:30 p.m. EDT.
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Call is over, and it sounds very similar to what we have heard from other large tech companies.
Demand has not fallen off a cliff, but it has decelerated. CEOs are slightly more cautious, and spending is being adjsuted accordingly. This moderation in demand has left many companies with higher inventory levels than was projected last quarter -- even though managements are trying to spin it as something more innocuous.
CSCO's stock is down a little more than a buck after hours (-5.5%) due to lower-than-expected inventory turns, slightly lower gross margins, and mostly due to lowered revenue guidance.
These stocks will only continue to enjoy "growth" multiples if they can continue to raise the bar, and these results don't qualify
EPS came in a penny ahead of estimates at 21 cents. Revenue also beat expectations, growing 26% yr-over-yr to $5.93 billion. Gross margins were in line at 68.4%, and operating margins were higher at 32.4%.
Inventory turns were up only slightly at 6.4x, and investors could be disappointed that inventory levels grew 7.7% sequentially, while sales grew less at +5.4% sequentially.
We should get more color on the situation, as well as guidance for next quarter, when the conference call gets underway.
Increased Market Share, Productivity, Etc.
8/10/04 4:40 PM EDT
CEO Chambers starts the call with overview. He is commenting on increased market share, increased productivity (revenue per employee), and successful focus on emerging areas like China, India, and Russia.
Cash flow from operations was higher than expected at $2.1 billion. The company repurchased 90 million shares at an average of $22.36.
Revenue Breakdown Per Segment
8/10/04 4:45 PM EDT
Product book-to-bill was approximately 1.0. The quarter was relatively linear by week and month. Product revenue grew 30% year-over-year.
Revenue breakdown (by segment):
Routers = 24% of revenue
Switches = 41%
Adv. Tech = 16%
Services = 16%
DSOs rose by one day to 28 days. Deferred revenue grew to $4.50 billion vs. $4.36 billion last quarter. Headcount was basically flat for the quarter.
Revenue by Geography
8/10/04 5:00 PM EDT
U.S. = 48% of revenues
EMEA = 30%
Asia/Pacific = 11%
Japan = 7%
Normal seasonality across all geographic "theatres."
U.S. enterprise and commercial orders rose in the mid-teens. Service providers orders also grew in high-teens, for the first time in a few years.
EMEA grew mid-single digits(order growth). Russia grew 40% yr/yr.
Asia/Pacific: China grew low double-digits; Australia showed extremely strong order growth; Korea was strong, and India is coming along nicely (triple digit growth).
More Revenue Breakdowns
8/10/04 5:08 PM EDT
Management is highlighting U.S. Enterprise and Commercial, as well as service provider orders under "what went well" heading. Breakdown of Advanced Technology revenues:
VoIP = +15% Q/Q (all figures are sequential)
Wireless = +15%
Storage = +41%
Optical = +8%
Security = -2%
Networked home = -5%
Under "areas of concern", management highlights:
CEOs more cautious since last quarter. Lower lead times could result in more seasonality. Normal concerns for competitors: Capital spending linked to GDP growth (meaning if economic growth slows, so does spending on CSCO equip.)
Guidance and More
8/10/04 5:15 PM EDT
Next quarter revenue guidance is forecast to be +0-2% (the midpoint of that range would imply roughly $6.0 billion, versus current estimates for $6.06 billion, or +2.2% sequentially).
Chambers says Q1 is always a seasonally weaker quarter for the company, especially in Europe. (Stock ticks incrementally lower in after-hours trading on this guidance).
Q&A
8/10/04 5:19 PM EDT
Q: How much are macro datapoints weighing into your guidance?
A: I would say its more due to seasonal factors vs. macro issues. Most of our customers are a little more cautious, but this is still pretty close to what we would have projected a few months ago. (I was on the call a few months ago, and it definitely sounded more optimistic that this.)
Q: Do you think carrier capex will be weaker in 2H04?
A: I don't think so, but service providers around the globe are trying to add more value with their CapEx dollars. As such, we would expect CSCO to garner a larger percentage of their spending.
Q: Are you concerned that switching and routing grew faster than advanced technologies? (good question)
A: Advanced technology grew about what we expected. We like the momentum there. (kind of a fuzzy answer, since I think its pretty clear advanced technology revenue growth decelerated)
Q&A II
8/10/04 5:54 PM EDT
Q: What happened to returning toward 7-8x inventory turns?
A: We need to focus on meeting the needs of our customers, so that's why you're going to see inventories stay at roughly these levels. (I think he skirted the demand side of the equation, that maybe demand just isn't as strong as they thought last quarter.)
Q: What's going on with security, in terms of weakness?
A: We have a bright outlook for security, it's just that the tough comparisons made for negative sequential growth. But I am very comfortable with our security strategy and win rate. (He didn't acknowledge JNPR, but that could be a small thorn in their side.)