Cisco's Downbeat Forecast More Important than Decent Earnings

5/7 - "Cisco Systems (Nasdaq: CSCO) is still on track to meet its own ambitious performance targets, because this world of ours is thirsty for more and smarter network infrastructure. Yes, even under a slowing American economy."

"(CEO John) Chambers believes that the next five years will see Cisco setting itself even farther apart from competitors like Nortel Networks (NYSE: NT), Juniper Networks (Nasdaq: JNPR), and Alcatel-Lucent (NYSE: ALU). The key is "Web 2.0" technologies like cloud computing and software-as-a-service (SaaS), where Cisco is designing its routers and switches to offload some of the data processing from the back-end servers."

"Add a broad market recovery in Asia (particularly Japan), a dash of high-definition online video, and a truly long-term business plan, and you have a recipe for sustained excellence. The stock is never cheap, but sometimes you get what you pay for."

5/7 - "Orders in the U.S. are growing in the mid-single-digit range; given that the domestic market is still a large slice of the company’s revenues, it will likely take a U.S. economic recovery before Cisco can get back on track with its long-term goal of top-line growth in the 12%-17% range."

"Samuel Wilson, JMP Securities: “From an analysis of the numbers, it’s clear to us that Cisco is seeing a broad slowdown in its business,” he wrote. “Almost all customers segments, geographic segments and product segments are witnessing decelerating year-over-year growth.”

"Simona Jankowski, Goldman Sachs: She maintains a Buy rating on the stock, but cautions that the company’s business “will not inflect positively until the January quarter at the earliest.”

"Paul Mansky, Citigroup: He maintains a Buy rating, but notes that “the underlying dynamic of decelerating order growth across a broad spectrum of markets points to a “U” versus a “V” shaped recovery, which likely has the shares giving up some of their 14% gain in recent weeks.”

5/7 - "If you want to be a smart investor, you should scour the earth for high-quality companies and then make big bets on them--right? Wrong. You should find high-quality companies that you can buy at low prices."

"Cisco's a great company, right? Hell, yes...If you bought Cisco in the late 1990s, however, you paid waaaaay too much for it. In fact, unless you bought it before 1998, you'd have been better off in cash. Cash! If Cisco treads water for another few months, it will have been flat for a decade. (And we won't talk about how great an investment Cisco has been if you bought it in 1999, when it was trading at, gulp, $70)."