Cisco shares rise as dividend hike eclipses sales worries

SAN JOSE, Calif., Thu Aug 16, 2012 – Shares of Cisco Systems Inc. looked set to open up 7 percent on Thursday after the network equipment maker’s dividend hike overshadowed a lackluster quarterly sales performance and prompted several brokerages to raise their price targets on the stock.

Shares of the company, which closed at $17.35 on the Nasdaq on Wednesday, rose to $18.49 in premarket trading on Thursday. The stock had fallen 11 percent after Cisco reported a weak third-quarter profit in May.

Cisco said on Wednesday it will raise its quarterly dividend by 75 percent to 14 cents per share after reporting fourth-quarter revenue largely in line with analysts’ estimates. It also said it bought back $1.8 billion worth of shares in the quarter.

Barclays Capital analysts said the higher dividend suggested a significant shift in direction and placed Cisco near the high-end of its large-cap IT tech peers such as Hewlett-Packard Co., Intel Corp. and Microsoft Corp. in terms of dividend yield and free cash flow.

“The 75 percent increase in dividend and commitment to return at least 50 percent of free cash flow in dividend and buybacks was not expected given high offshore cash balance and should be rightly viewed as sign of overall confidence on part of Cisco,” said Citi Investment Research analyst Kevin Dennean.

Cisco shares drop on tech spending concerns about European economy

SAN JOSE, Calif., Thu May 10, 2012 – Shares of Cisco Systems Inc. fell 9 percent in premarket trading on Thursday, after the network equipment maker forecast weaker-than-expected quarterly results on growing worries about the European economy and nterprise IT spending.

Brokerages including BMO, Deutsche, Nomura, Piper Jaffray and Mizuho cut their price target on Cisco’s stock.

Cisco reported higher-than-expected third-quarter earnings on Wednesday but said it was “really hard to read” what would happen in the second half of the year as customers were more cautious about Europe.

The company, which relies on government and corporate spending on Internet gear, could be in for further estimate cuts if economic trends deteriorate further, said Nomura.

Cisco’s comments will likely pressure stocks across the sector, analysts said.

“The weak fourth-quarter guide is indicative of near-term macro-driven uncertainty in enterprise IT spending,” said Deutsche Bank analyst Brian Modoff.

Cisco’s comments about its telepresence sales, which were hurt by spending cuts by governments as well as businesses, are also negative for videoconferencing company Polycom Inc., BMO Capital Markets analysts said.

Cisco to buy software developer NDS for $5 billion

SAN JOSE, Calif., Thu Mar 15, 2012 — Cisco Systems said on Thursday it will buy NDS, a developer of software for multi-channel television networks, for $5 billion.

Founded in Israel in 1988 and headquartered in London, NDS is 51 percent owned by private equity fund Permira and 49 percent by News Corp. It maintains a large research and development center in Jerusalem.

Cisco said it will pay about $5 billion, including the assumption of debt and retention-based incentives, to acquire all of NDS. The acquisition, which is expected to close during the second half of 2012, has been approved by the boards of both companies.

The deal’s value is about 35 percent higher than NDS’s value when it was delisted from the stock exchange in 2009.

NDS specializes in the development of interactive systems for secure delivery of entertainment and information to digital TVs, digital set-top boxes, PCs and mobile devices. It also provides electronic security systems for Web applications.

Its technology is expected to complement Cisco’s Videoscape video delivery technology.

The company’s flagship product is its encryption and conditional access system VideoGuard, which is installed on home TVs via smartcards integrated into set-top boxes.

NDS’s products are at the heart of News Corp’s technological infrastructure — the company’s coding system allows it to control the channels provided to each subscriber on multi-channel TV as well as billing.

Optimism springs eternal in Cisco shares ahead of results

NEW YORK/CHICAGO – Cisco’s earnings have had a way of crushing the dreams of optimists in the last two years.

Shares of the computer networking giant have often rallied ahead of its earnings report, sparking bullish sentiment among options players, only to fall sharply after the company fails to meet lofty expectations.

There are fears this will happen again when the company reports results after the close of trading on Wednesday. The stock has been on a roll, rising more than 50 percent from a 52-week low to levels not seen in a year.

“There is a lot of optimism from option traders heading into earnings,” said Joe Bell, senior equity analyst at Schaeffer’s Investor Research in Cincinnati. “If the results do not meet expectations, there may be a lot of downside.”

The day after five of the last six earnings reports, Cisco Systems Inc shares have been hit hard. The stock fell 10 percent on August 12, 2010, 16 percent on November 11, 2010 and 14 percent on February 10, 2011, according to Reuters data.

The one exception in the last six quarters was in August 2011, when the shares gained 16 percent the day after results.

Wall Street expects Cisco to report a stable quarter, buoyed in part by improving enterprise demand in the United States.

Cisco has outperformed its peers this year, rallying 11.7 percent, and options activity has been tilted to the bullish side.

Heading into Wednesday’s earnings report, investors bought 3.61 calls for every put on three U.S. options exchanges as new positions over the past 10 trading sessions, according to Schaeffer’s data. That gauge clocked in higher than 79 percent of the readings taken during the past year.

Sentiment in Cisco is among the most optimistic in the S&P 1500 index, “so even a slight disappointment in earnings could whack the stock,” said Jason Goepfert, president of SentimenTrader.com in Minneapolis.

Cisco’s CEO says customers still spending despite uncertainties

SAN FRANCISCO/NEW YORK ― Cisco Systems Inc. CEO John Chambers said he remained upbeat about technology spending by customers on Tuesday despite an uncertain economic outlook.

“I haven’t called on a customer with Cisco in the last 120 days who isn’t going to keep their spending with Cisco, or increase it,” he told investors during the company’s annual analyst day.

But Cisco, once the darling of the telecommunications world, may use the event as a platform to severely lower its long-term revenue growth target of 12 to 17 percent as the company matures and enters a new business phase, analysts say.

As early as May this year, Chambers had flagged a change to the growth target for the September analysts’ meeting, which began Tuesday. He said at the time the company’s target was “not reflective of the environment” it is now operating in.

Since August, investors have turned cautiously hopeful at the pace with which Cisco’s restructuring has moved. Chambers kick-started the overhaul by declaring in April that the Internet routing and switching company had lost its way.

Despite tepid government and corporate spending on IT, Cisco last month produced results that exceeded scaled-back expectations. Many saw that as an early sign of success in a broad effort to clean house that has included laying off 15 percent of its staff and unloading its set-top box division.

Cisco buys Versly to boost collaboration tech

NEW YORK ― Cisco Systems Inc. said Monday that it has bought privately-held firm Versly to expand in collaboration technology aimed at corporate clients looking to make employees work together more easily.

Cisco did not say how much it is paying for San Francisco-based Versly, which produces a “plug-in” that expands the capability of Microsoft software such as documents, spreadsheets and e-mails.

Collaboration technology is one of five priority areas Cisco is organizing the company around. The network equipment maker estimates that there is a total addressable market of about $45 billion for such technology.

Cisco’s existing collaboration technology includes online meeting service WebEx. It said that it plans to integrate Versly technology with its own products.

Cisco shares rose 29 cents or almost 2 percent to $15.60 in late morning trade on Nasdaq.