Cisco Systems, Inc. (NASDAQ:CSCO) will post its third quarter earnings on May 14. Raymond James analysts Simon Leopold, Georgios Kyriakopoulos, Victor Chiu are not very upbeat on sales for the company this quarter, and expect the number to miss their estimate of $11.39 billion and the consensus for $11.36 billion, yet remain within the guidance of $11.24-11.48 billion. Earnings per share, on the other hand, are expected to be in-line with the consensus of $0.48. Analysts are expecting guidance for the fourth quarter to come low on sales, possibly in the range of 3-6% year over year.

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Europe, Japan strong, grim in the US

In the last quarter, Cisco Systems, Inc. (NASDAQ:CSCO) posted a significant year over year decline, and the guidance indicated that the company does not expect a recovery in sales. The slowdown has been the result of various product transformations. “Our review of prior transitions suggests the Switching pause could be deeper and longer than we model yet with a more robust recovery if it should resemble the prior cycle,” according to the RJ analysts. Transformation in WLAN, collaboration and service provider video are more stable and less impactful.

The analysts at Raymond James noted that there are minor factors which would help the company to post upbeat result for the quarter or to issue an improved outlook. Additionally, the report expects that the company is targeting bottom line and cash generation “while rebuilding backlog.”

Regions like Europe and Japan look good for Cisco Systems, Inc. (NASDAQ:CSCO), but analysts are not very confident about the United States. Currently, capital expenditure in the U.S. is concerned more with non-equipment spending such as capitalized software and labor and continued market.

Cisco to continue with acquisitions

Analysts are upbeat about company’s performance in the data center sector, and are hoping for positives from the security. Additionally, the gross margin is expected be stable and above 60%. Cisco Systems, Inc. (NASDAQ:CSCO) will not slowdown its pattern of acquiring software companies and its focus on software, though higher software content will be challenging for top-line growth, according to analysts.

The networking company’s efforts to bring down costs will protect earnings and Cisco Systems, Inc. (NASDAQ:CSCO) will remain committed to meeting earnings per share forecasts. Analysts believe that Cisco faces a challenge in achieving sales numbers, but will continue the purchase of its shares and control costs. For the quarter, free cash flow is expected to remain strong at $2 billion.

Raymond James analysts have placed Outperform 2 rating on Cisco Systems, Inc. (NASDAQ:CSCO) with a price target of $26.