Cisco Systems CSCO is set to report first-quarter fiscal 2020 results on Nov 13.
The company’s results are likely to reflect the robust adoption of its security solutions, including web security, unified threat, and network security and advanced threat offerings.
However, a decline in orders due to the U.S.-China trade war and seasonality, a slowing China economy and weakness in service provider and enterprise vertical are likely to have affected the fiscal first-quarter top line.
Click here to know how Cisco’s overall first-quarter performance is expected to be.
The Zacks Consensus Estimate for Infrastructure Platforms revenues is pegged at $7.59 billion, implying a 0.7% decline from the year-ago quarter’s reported figure.
Strength across switching, wireless and data center end-markets, and robust adoption of new campus switch — Cat9K and Nexus 9K — are likely to have benefited the segment’s top line. Notably, Infrastructure Platforms revenues grew 6% year over year to $7.876 billion in the second quarter, driven by these factors.
Moreover, the company’s portfolio strength is a key catalyst. Additionally, a focus on automating network management by infusing AI and ML tools is expected to have helped the company attract new customers in the to-be-reported quarter.
However, weak IT spending related to Communications Services, which per Gartner’s latest report is projected to decline 1.1% in 2019, remained a downside.
In this regard, it is noteworthy that the company is facing significant competition from the likes of Arista, Juniper and F5 Networks FFIV in the networking infrastructure market.
Furthermore, the company has integrated Cisco Spark with Webex Platform, which enhanced Webex Meeting and enabled it to introduce Webex Teams, thereby strengthening its collaboration portfolio. In the fiscal fourth quarter, collaboration revenues rose primarily owing to growth across AppDynamics, UC infrastructure and TelePresence endpoints.
The Applications segment’s fiscal first-quarter top line is expected to have benefited from these trends along with an expanding portfolio that now includes AI-driven innovation like people insights, facial recognition and Webex Assistant.
Additionally, the company’s partnerships with the likes of Telenor, Apple AAPL, Microsoft MSFT, and others bode well. The addition of new products and collaboration synergies are likely to have benefited the company in the to-be-reported quarter.
The Zacks Consensus Estimate for Applications revenues is pegged at $1.48 billion, suggesting growth of 4.1% from the year-ago quarter’s reported figure.
Moreover, a strong demand witnessed by web security, unified threat, network security and advanced threat solutions in the fiscal fourth quarter most likely continued in first-quarter 2020, primarily driven by growing security headwinds faced by enterprises globally.
The company’s expanded family of cloud security solutions that helps in securing identity, endpoints and the network is expected to have gained cloud-based customers in the fiscal first quarter.
The Zacks Consensus Estimate for Security is pegged at $722 million, indicating an improvement of almost 11% from the figure reported in the year-ago quarter.
Cisco currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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