Cisco Results May Signal That Recovery Is Far Off

Cisco Systems Inc.’s earnings report this week may signal that an industry recovery is still a ways off as analysts and investors expect to hear a repeat of weak sales forecasts from the networking giant.

Also of interest to investors will be whether the No. 1 maker of gear that directs Internet traffic will expense its stock options and how it plans to use its huge cash stockpile.

“My interest is clearly on the top line [revenue]. People are questioning whether this is a growth story again,” said Alex Vallecillo, senior portfolio manager with Armada Funds, which holds Cisco shares in several of its mutual funds.

Cisco, based in San Jose, has been hit by a slowdown in spending by its large customers but has suffered less than other suppliers because large corporate “enterprise” customers account for about 80% of its sales, with only 20% in the battered telecommunications sector.

Cisco is scheduled to report its fiscal fourth-quarter results after the market closes Tuesday.

The stock faltered Friday as reports continued to swirl about the possible departure of Chief Financial Officer Larry Carter.

The company denied the rumors, repeating that Carter, who is turning 60, has always said he will retire “at some point in the future” and at that time there will be “a smooth and well-planned transition.”

The company also repeated Friday that it will certify its financial results in late September in its annual 10-K filing with the Securities and Exchange Commission.

Cisco’s stock fell more than 8% Thursday on rumors Carter and Chief Executive John Chambers would resign and would not certify the company’s financial results. The company denied both reports.