Networking giant, Cisco Systems (NASDAQ: CSCO), a leading conglomerate which develops, manufactures and sells networking hardware, telecoms and other networking solutions is due to release its earnings reports on the 16th of November after markets close. Despite being the largest networking company in the world, CSICO has had to re-evaluate is strategy as it goes through a period of restructuring in an attempts to consecutive quarters of declining revenue.
The restructuring plan has Cisco looking for alternatives to their historically strong products of network switches and routers since they have begun slumping, not producing much growth. Instead the giant is turning focus on collaboration, security and data centers as they look to reignite growth. This has come at a price of layoffs, which in the previous quarterly release, dampened the outlook despite the company beating investors’ expectations. Roughly 7% of Cisco’s global work force will be eliminated from redundant services in hopes of making the company leaner and return the company to growth.
Looking at the stock price of Cisco, we see that markets are confident in Cisco`s ability to turn things around as we see the stock trading higher by just over 40% from its January thanks to the company beating expectations quarter on quarter despite falling revenues. This week’s release will be closely watched by investors as the stock flirts with its 2007 highs, and depending on whether the expectation is beat or not, we will see the pair breach these levels or slump back to earlier lows.
The earning per share (EPS), which is the amount of revenue produced by the company for every outstanding share, is expected at $0.59 per share. Should the actual number beat expectations we will see Cisco being lifted as bulls look to capture $32 as a gateway to higher prices. However, should the earning disappoint investors, we expect Cisco shares to drop to sub $30 as investors back away from the stock