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TMCNet:  The Zacks Analyst Blog Highlights:Cisco Systems Inc., Juniper Networks, F5 Networks, Alcatel-Lucent and Hewlett Packard Company

[November 13, 2012]

The Zacks Analyst Blog Highlights:Cisco Systems Inc., Juniper Networks, F5 Networks, Alcatel-Lucent and Hewlett Packard Company

CHICAGO, Nov. 13, 2012 /PRNewswire via COMTEX/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Cisco Systems, Inc (CSCO), Juniper Networks, Inc (JNPR), F5 Networks, Inc (FFIV), Alcatel-Lucent (ALU) and Hewlett Packard Company (HPQ).


(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO) Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks are offered free.

Here are highlights from Tuesday's Analyst Blog: Earnings Preview: Cisco Systems Cisco Systems, Inc. (CSCO) is scheduled to announce its first quarter fiscal 2013 results after the closing bell on November 13, 2012, and we notice a few downward movements in analyst estimates so far.

Fourth Quarter Overview Cisco's fourth quarter 2012 earnings (excluding one-time items and including stock-based compensation) beat the Zacks Consensus Estimate by 3 cents or 7.8%.

Revenue saw 4.4% year-over-year growth, driven by increases in both product and service revenues. Orders saw a 2% year-over-year increase compared with a 4% increase in the third quarter, similar to the trend in the last quarter and indicating slower end markets.

Margins decreased sequentially as well as from the year-ago quarter due to unfavorable mix and weak pricing. Also higher warranty expense pushed up the total manufacturing cost, negatively impacting margins.

First Quarter Guidance For the first quarter, Cisco expects revenue to be flat to down 1.8% on a sequential basis and increase 2-4% on a year-over-year basis. Non-GAAP operating margin is expected to be 26.5-27.5% of revenue and non-GAAP EPS is expected to be 45 to 47 cents.

(Detailed earnings results can be viewed in the blog titled: Cisco Orders Driving Shares) Agreement of Analysts Out of the 13 and 14 analysts providing estimates for the first quarter and fiscal 2013, 2 analysts made downward revisions in the last 30 days.

The majority of analysts expect the company to report its first quarter revenue below the consensus estimate of $11.8 billion. Given the continuing problems in southern Europe and the uncertainty in Cisco's switching and routing divisions over the last few years, the analysts do not expect an outperformance. They expect limited near-term spending and continued weakness in the public sector.

However, they expect earnings to come in line with the consensus estimate of $0.46 per share, owing to modest gross margin upside from favorable mix, cost cut initiatives, and the recent NDS acquisition. They expect the company to announce more restructuring activities, further asset sales and new products, which should all be accretive to its profits.

The majority of the analysts expect Cisco to issue a conservative second quarter guidance due to continued signs of a slow global capex environment.

Magnitude of Estimate Revisions In the past 30 days, the Zacks Consensus Estimate remained unchanged for the first quarter as well as for fiscal 2013 at 41 cents and $1.72 per share, respectively.

Over the 90-day period, the Zacks Consensus Estimate was up by a penny for the first quarter and by 3 cents per share for fiscal 2013.

Recommendation We believe that macro headwinds, a tight spending environment and strong competition could limit first quarter revenue growth.

We believe a conservative guidance by Cisco's peers including Juniper Networks, Inc. (JNPR), and F5 Networks, Inc. (FFIV), also reinforce the view that the macro environment will continue to be challenging in the near term.

However, the company's restructuring activities, focus on new products, and pursuance of growth opportunities in international markets could be potential catalysts going forward.

We think the real challenge facing Cisco right now is the possibility of material share losses, as public sector spending shrinks or shifts away from its technology. Hence, the company's ability to gain share with new products in growth areas will be the ultimate determinant of its success, in our view.

Cisco is no doubt the networking giant. But competitors such as Alcatel-Lucent (ALU), Juniper, Hewlett Packard Company (HPQ) through its 3Com acquisition and F5 Networks are slowly picking up market share.

Currently, Cisco has a Zacks #4 Rank, implying a short-term Sell rating.

Today, Zacks is promoting its ''Buy'' stock recommendations. Four daily picks are offered free.

About Zacks Equity Research Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Follow us on Twitter: http://twitter.com/zacksresearch Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748 ref=ts Media Contact Zacks Investment Research 800-767-3771 ext. 9339 support@zacks.com http://www.zacks.com Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, brokerage, market making or asset management activities of any securities. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

SOURCE Zacks Investment Research, Inc.

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