Cisco Systems, Inc. (NASDAQ:CSCO) reported a quarter that was not very good, but managed to beat estimates. CNBC’s Jim Cramer talked about the stock and looked at its earnings, while also focusing on potential opportunities and hurdles that investors may want to keep a close eye. Shares of Cisco were trending down more than 2% in the early afternoon.
The networking gears manufacturer reported fourth-quarter revenue of $12.36 billion, which was down from $12.42 billion in the like quarter a year ago. However, the revenue was better than $12.14 billion that analysts estimated for the quarter. Even net income was down to $2.25 billion, from $2.27 billion in the prior year.
Even with the year-over-year performance decline, Cramer maintained his admiration for Cisco Systems, Inc. (NASDAQ:CSCO) and said the quarter was good. However, he identified tough markets for the company, which are mostly emerging markets. Cramer also noted that mergers in the service providers deny Cisco good business, especially in the telecom area.
“[…] Brazil is not good. Russian not good, Indonesia not good. India they did some hope work. Mexico very bad. I thought there is also issue in the service providers. It looks like they are talking about the mergers, have put a halt […],” he said.
Still on the consolidation in the media and telecom industries, Cramer said spending has reduced, which is not conducive for Cisco Systems, Inc. (NASDAQ:CSCO).
“[…] Most mergers in the shortest period of time in media have really quenched the possible business. Everyone is kind of freezing; service providers are spending not their good,” he noted.
Cisco Systems, Inc. (NASDAQ:CSCO)’s committed to dividends and stock buyback, which put money into the pockets of investors, are some of the things that Cramer like in the company. He also thinks increased federal spending by 10% and a healthy business environment in Europe would help Cisco net some gains even as it struggles in the emerging markets.
As for the challenge in the emerging market, Cramer thinks Cisco Systems, Inc. (NASDAQ:CSCO) is not feeling the heat alone, but is “going to be tough for everybody,” he said. Finally, he said that while Cisco Systems, Inc. (NASDAQ:CSCO) may not get its shares big up on the quarter, it is preserving the gains.