Cisco reported annual earnings today. Wall Street, so far, responded unfavorably to future guidance provided by the company. I am not sure I fully agree, but acknowledge that the crystal ball is opaque at best with the current irrationally moving economic parts … so one key question: “Is CSCO hedging the future with very, very conservative guidance?”
This financial block really got my attention given the service provider order drop – quote, with my bold: ” In terms of orders in Q4, total product orders growth was flat. Looking at our geographies Americas was up 1%, EMEA was up 4% and APJC was down 8%. Total emerging markets was down 8% with the BRICS plus Mexico down 20%. In our customer segments, enterprise was down 2%, commercial grew 7%, public sector was up 13% and service provider was down 21%. “
CEO continued on: “Let me double click on service provider just a bit. The Americas was generally the same from an order perspective from the prior quarter, so no real shift positive or negative. Europe was actually positive in the SP space. In Asia, we saw continued weakening in our China service provider business and we had two massive build outs in India a year ago that just didn’t replicate this year with the two major players there. That’s the net of the service provider situation it’s not more complicated than that. “
Bottom line – if CSCO was not one of my largest stock positions, I might be backing up the truck over the next few downturns (I am assuming them to occur), so I’ll watch and back up the little red wagon when opportunity knocks with a >3% yield.