“We believe recent restructuring announcements reflect management awareness of an increasingly competitive environment that mandates focus and enhanced productivity,” said the analysts, who have a hold rating on the stock. “We believe the industry is evolving with replacement opportunities that will result in overall growth, but with more competition and less market share for Cisco.”
Deutsche Bank also rates the stock a hold. “We think the company will report results better than many fear, but still believe the long term outlook remains challenging,” it said in a preview.
“We think the company has also shed costs in the last two quarters which should help margins,” Deutsche Bank analysts wrote. “Despite this the company still faces considerable uncertainty in some of their core markets.”
Cisco is a top holding in tech ETFs such as iShares Dow Jones US Technology (NYSEArca: IYW), where it accounts for about 4% of the portfolio. It also represents about 4% of PowerShares QQQ (NasdaqGM: QQQ), an ETF tracking the Nasdaq-100 Index.
iShares Dow Jones US Technology
