Fly Intel: What to watch in Cisco's earnings report

Cisco (CSCO) is scheduled to report results of its fiscal fourth quarter after the market close on Wednesday, August 14, with a conference call scheduled for 4:30 pm ET. What to watch for: 1. Q4 EPS, REVENUE CONSENSUS UP A TICK: Along with its last report, Cisco guided for Q4 adjusted earnings per share in the range of 80c-82c on revenue growth of 4.5%-6.5%. At the time, analysts were expecting the company to report Q4 EPS of 81c on revenue of $13.29B, but those figures have since increased to 82c and $13.39B, respectively. 2. CHINA: Cisco said on its third quarter conference call that it had executed on everything it needed to regarding tariffs on Chinese goods, as it has greatly reduced its exposure to China, and noted that impacts from tariffs are already baked into its guidance. In an interview on CNBC's Mad Money a day later, CEO Chuck Robbins said that China only makes up about 3% of Cisco's business. Meanwhile, Cisco was represented at a meeting between U.S. President Donald Trump and other technology companies, during which the president agreed to grant timely licensing decisions to U.S. tech firms that seek to continue sales to China's Huawei as the White House was aiming to restart trade talks with Beijing. 3. ACACIA ACQUISITION: On July 9, Cisco and Acacia Communications (ACIA) said they had entered into a definitive agreement under which Cisco agreed to acquire Acacia. Under the terms of the deal, Cisco will acquire Acacia for $70 per share in cash, or for roughly $2.6B on a fully diluted basis, net of cash and marketable securities. The transaction is expected to close during the second half of Cisco's fiscal year 2020. Upon completion of this transaction, Acacia employees will join Cisco's Optical Systems and Optics business within the networking and security business under David Goeckeler, the companies said at the time. Following the announcement, Piper Jaffray analyst James Fish said he had a "mixed view" of the acquisition, as he believes Cisco's Infrastructure Platform products will "significantly benefit" from the vertical integration of the acquisition of Acacia with greater performance, yet he said he would have preferred Cisco further transform its portfolio towards software instead of acquiring Luxtera and Acacia. Meanwhile, JPMorgan analyst Samik Chatterjee said that the acquisition of Acaica strengthens Cisco's core networking portfolio. Both analysts maintained Overweight ratings on Cisco at the time. 4. CYBERSECURITY WHISTLEBLOWER: Late last month, CNBC's Kate Fazzini reported that Cisco had reached an $8.6M settlement agreement with federal, state, and local agencies in a whistleblower case involving a cybersecurity issue. According to Fazzini, the case involved efforts by a Denmark-based employee of a company partner who told Cisco in November 2008 about a flaw in software made for a line of Cisco surveillance cameras. The problem wasn't solved for years, and the funds are meant to reimburse the whistleblower and federal, state, and local entities to whom the company misrepresented the safety of the devices, the reporter noted.