Can Cisco Sustain Its Turnaround???

Cisco (CSCO) applauded the street with their latest results coming above analyst expectations. The company recorded a growth of its revenues, while net profit was slightly down. As a result of this success, the stock reached its height of 52 weeks. The company bagged some strong orders during the quarter, which helped to improve their top line. Although management quotes a difficult business environment, hopes the back of high digitization seen in businesses, governments and schools.

Change of strategy:

With that in mind, Cisco has changed its business model to sell boxes and independent services for the sale of architectures and solutions that drive business results. It has received good response from companies like General Motors, with great success in cities like Barcelona and Chicago that have evolved in smart cities. Cisco is quite positive about their prospects in this regard and continues to improve his skills.

The company has made some improvements to the product that will provide a significant advantage in the coming days. In its routing system platform network convergence (NCS) converges IP and optical networks with virtualization. In fact, Cisco account as the only player with the activities driving the convergence to their customers. In addition, new releases, as NCS 6000 and CRS-X have reported a strong impulse happens in the coming days. In the future, these innovations and new additions will be an important growth factor for both top and bottom line.

A closer look at the guide:

In addition, the company will also expand its computer system (UCS) unified portfolio with a wider range of products to meet the demand of large cloud environments. Compared to their peers, Cisco is developing a cloud solution that is interconnected with the other. During the time that this would increase its strategic relationship with customers and, ultimately, boost revenue growth.

For the second quarter, Cisco expects revenue growth of 4% to 7%, while it expects earnings to be in the range of $ 0.50 to $ 0.52 per share. The company also expects a good performance of the EMEA region.
But Asian markets have not responded well, with the main decline in the Chinese economy and has a gloomy outlook for the coming days. Furthermore, Cisco is positive about their prospects in the US and is expected to achieve double-digit growth. Not only this, but has a strong position in emerging markets and appears to be well positioned to take advantage of growing economies.

Conclusion:

So because of all these factors, we obtain mixed evidence of Cisco. The stock has risen considerably in the last year and is currently in its 52 weeks. Although long-term prospects of the company seems to be good, but lower than expected sales forecasts for next quarter may have negative feelings among investors that could weigh on stocks in the short term.