Cisco Systems, Inc. (NASDAQ:CSCO) will hold its annual Financial Analyst Conference (FAC) on December 12. The company recently issued disappointing 2Q:2014 estimate of an 8-10% sales decline. Brian J. White of Cantor Fitzgerald writes that the networking equipment maker will be bombarded with tough questions at the FAC about its unsettling outlook. It’s been almost a month since Cisco Systems, Inc. (NASDAQ:CSCO) announced its Q1 results. That gives the company sufficient time to reflect on its results and provide a better understanding of why its business deteriorated faster than its peers. And what Cisco Systems, Inc. (NASDAQ:CSCO) will be doing to fix those problems.

Cisco

What should Cisco do with its set-top-box business?

The company would obviously face challenging questions. But its 3.2% dividend, valuation, and shareholder-friendly policies could soothe investors through the transition period. Cisco Systems, Inc. (NASDAQ:CSCO) is expected to talk about its long-term goals and strategies at the FAC. But analysts would be interested more in service providers, emerging market trends and federal spending.

Cisco Systems, Inc. (NASDAQ:CSCO)’s set-top-box business has been a cause of concern for investors. During the first quarter, set-top-box orders declined about 20% YoY. Mr. White believes that this business will be a hot topic at the Financial Analyst Conference (FAC). The San Jose-based company remains committed to this business. But it may face shareholder discontent if the business shows signs of further deterioration.

Cisco shouldn’t talk about long-term sales growth target

That’s what Brian J. White says. In September 2011, the company lowered its long-term sales growth target from 12-17% to 5-7% annually, but reiterated an EPS growth target of 7-9%. Initially, these targets were only for 3 years, but later the company extended them to 3-5 years. Cantor Fitzgerald estimates Cisco Systems, Inc. (NASDAQ:CSCO)’s sales to grow at 2% between FY2011 and FY2014. Earnings should grow at a 5% annual rate. But Cisco Systems, Inc. (NASDAQ:CSCO)’s FY2014 earnings outlook of $1.95 to $2.05 suggests 6-8% EPS growth in the given period. So, Brian J. White says that the company should drop its sales growth objectives and focus on EPS growth targets.

Cantor Fitzgerald has a Buy rating on the stock with $26 price target. Cisco Systems, Inc. (NASDAQ:CSCO) shares rose 0.48% to $21.01 in pre-market trading.