Can Cisco surprise?
This is what I expect: I think CSCO has the potential to surprise the street not only for FQ1 but also in the April guidance. I believe closer to 3% growth is possible for January. Street expects April guidance of 1.6% sequential growth, I believe 2.5% at the high-end is possible for April guidance. Book-to-bill could be better than 1 (whereas most expect this to be below 1 or close to 1), inventories should decrease slightly, opex will be up due to continued hiring, gross margin could be flat to slightly up, Services should have a stellar quarter. Advance Technologies had a good quarter as well driven by optical, Linksys and IP Telephony.
All in all it should be a decent quarter with a possibility of a positive surprise. But I do not think street estimates for the year will move up substantially. But given that CSCO stock has been weak lately and is at a fairly decent valuation I think stock could move higher. But with CSCO being such a large part of Nasdaq it's very tough getting the direction of CSCO stock right- its like calling the market direction.
Full Disclosure: I am long CSCO