(stocks) Cisco profits up 29%, stock drops 9%

From the after-hours 1st quarter (Aug-Sept-Oct) financial results 'conference call' on Wednesday, November 07, 2007:

Cisco's [CSCO] 1st quarter [Q1] profit rose 29% ;


to 40 cents a share, or 19% ex a 3-cent tax gain.

Wall St. expected 36 cents.

Revenue rose 17% to $9.55 billion "just ahead of views".

Cisco sees Q2 sales growth of about 16%, just a hair under estimates. U.S. orders were relatively weak.

So how does the stock market react to a profit increase of 19% in 3 months, a revenue increase of 17%, and a company bringing in 9.5 billion dollars of revenue per quarter?

"Shares sank 9% in late trading after falling [an additional] 4% ahead of results from Tuesday's [Nov 6th's] 6 1/2-year high." [$ 34.24]

Talking-heads' explanation "Steady growth was disappointing.",

According to Reuters "Network equipment maker Cisco Systems posted a 37 percent rise in quarterly profit on solid demand from telecoms carriers, but its shares fell 9 percent on concerns about its outlook amid U.S. economic weakness."*

* "Cisco, which makes routers, switches and other equipment, said its fiscal first-quarter profit rose to $2.2 billion, or 35 cents per share, from $1.6 billion, or 26 cents per share, in the same period a year earlier.

Revenue, helped by Cisco's expansion into new products as well as emerging markets, rose 16.7 percent to $9.6 billion for the quarter ended Oct. 27. The company's August forecast was for revenue of $9.45 billion to $9.55 billion.

Analysts on average had forecast revenue of $9.5 billion, according to Reuters Estimates."

"Lives up to expectations,... but delivers a failure to RAISE guidance for growth."

Note: not a failure to raise estimates for profit or revenue, not a estimate of negative growth or loss, not even a lowering of guidance: the stock takes a hit because John Chambers did not raise estimates of 'growth' beyond the current estimate of 16 to 17 % per quarter -- as if you can earn billions AND increase earnings by 64% a year, year after year, forever... how crazy are we?

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