Cisco Systems Still a Wait and See

8/6 - "There are two reasons Cisco's numbers are surprising. The first is that its large router business primarily sells products to telecom and cable companies. Capital spending in those sectors has not been sharply increasing, so Cisco must be improving its market share or its margins.

Another significant piece of Cisco's business is home set-top boxes and small-business video conferencing. It touches a vast pool of consumers and enterprise with modest numbers of employees.

In other words, Cicso has risk across many pieces of the economy, and its still did well."

8/6 - "Bank of America reiterates Neutral due to a lack of positive catalysts going forward. Says guidance is achievable, however."

"FBR (Friedman Billings Ramsey) maintains Outperform and $31 price target but reduces estimates given lower guidance."

"JMP Securities reiterated Market Perform. Doesn't see favorable risk/reward profile."

"Citigroup reiterates Buy rating, but sees shares remaining range-bound due to difficult comps, service provider softness, and the possibility of acquisitions."

8/8 - "At Valuecruncher we decided to put some numbers around the potential future performance of CSCO using our on-line valuation tool...Our assumptions of revenues for the next three years are $43.5 billion in 2009 growing to $52.5 billion in 2011 – a 10% compound annual growth rate. We have projected EBITDA margins to grow from 29.0% in 2009 to 30.0% in 2011."

"We have used a terminal growth rate of 4.5%. We calculated this terminal growth rate based on year three growth of 10% dropping to a 4.0% stable growth rate by year 10. We used a terminal capital expenditure number of US$1.25 billion. We have used a WACC (discount rate) of 10.5%."

"Our analysis gives a valuation of $28.51 per share, which is 19% above the current share price of $23.93...Based on our analysis the current share price looks cheap."