Cisco Systems, Inc. (NASDAQ:CSCO) will release its earnings report for the third quarter of 2013 on Wednesday afternoon after the market closes on Wall Street. The company is expected to show a difficult third quarter, though the market will be hoping that the company shows some signs of management’s cost-cutting taking hold. Cisco marked the three months through September as its first quarter of 2014.

Cisco Systems Logo

A new report on the earnings, authored by BMO Capital Markets analyst Tim Long, describes the first quarter as a difficult one. Long is looking for the effects of the government shutdown on Cisco Systems, Inc. (NASDAQ:CSCO) earnings in the guidance for the company’s second quarter. Long is looking for earnings per share of 51 cents on revenue of $12.4 billion for the first quarter of the year.

Cisco earnings

By consensus, analysts studying Cisco Systems, Inc. (NASDAQ:CSCO) are looking for earnings per share of 51 cents for the three months period on revenue totaling $12.4 billion. The consensus figures were enumerated by Bloomberg. In the same three months of 2012 Cisco earned 48 cents per share.

According to Mr. Long, Cisco Systems, Inc. (NASDAQ:CSCO) is rated Outperform in the coming months. He put a price target of $29 on the company’s shares, despite the below-Street guidance he is looking for from management for the second quarter of the year. The company’s stock is trading at just above $23 on today’s market.

The positives in Wednesday report, according to Long, are likely to be better than expected gross margin, owing to a decline in Asia-Pacific, Japan, and China and a recovering business in Europe. The company’s management is also concentrating on reducing operating expenses, another net positive for tomorrows report.

Cisco projections

There are still negatives for Cisco Systems, Inc. (NASDAQ:CSCO), however, and tomorrow’s report is likely to contain enough of them to disappoint some investors. Guidance will be a focus for many shareholders. Long seems confident that the fourth quarter projections will come in below expectations, however. That doesn’t dampen his optimism about Cisco.

According to Long at its current valuation Cisco Systems, Inc. (NASDAQ:CSCO) still looks very attractive. The company is currently trading at just over 12 times 2012 earnings. Long values the firm at 13 time 2014 expected earnings. Tomorrow’s release is for the first quarter of the 2014 financial year, and will serve to direct those estimates.