MidnightTrader Earnings Play: Cisco Systems

Cisco Systems (CSCO | Quote | Chart | News | PowerRating) is slated to report its Q4 results after the bell tonight, and analysts polled by Thomson Financial are expecting the company to report a profit of $0.39 per share on revenue of $10.31 billion.

Cisco is one to watch for its evening performance. The stock demonstrates a long-term pattern of extending session-to-session performance on earnings announcements, posting wider next-day closing levels following 13 out of its last 20 extended-hours earnings events. However, in the near-term, the stock has moved to favoring a narrowing trend, cutting back or reversing its evening performance in next-day regular session trade in three of the last four quarters.

Looking deeper into the performance data, shorts should be interested to know that CSCO has seen a negative post-bell earnings-driven trade in 12 of the 20 quarters we've tracked, and in nine of those downside evening moves the stock has followed that trade with a more aggressive negative run in the next day's regular session.

On the long side, CSCO is about evenly mixed, recording eight earnings-driven upside evening moves in the 20 quarters we've followed - widening those gains four times the next day and recording four other events where the gains were cut back or reversed the following day.

On May 6, 2008, CSCO gained 1.3% in evening trade after topping Q3 Street estimates and setting revenue guidance in a range that straddled expectations. The stock lost its gain the following day, ending the May 7 regular session down 2%.

On Feb. 6, 2008, the stock fell 7.5% during evening trading after CSCO largely meets with Q2 results, but its revenue guidance disappoints. Shares rebounded to close up 1.3% the next day.

On Nov. 7, 2007, CSCO plummeted 9.6% in after-hours trade after topping estimates but also guiding its Q2 revenue view just below the Street view. It narrowed its negative move slightly the following day, closing the Nov. 8 regular session down 9.5%.

On Aug. 7, 2007, CSCO rose 5.7% in night trade after topping Q4 estimates and guiding Q1 sales above Street views. Shares added a bit more the next day to end the regular session up 6.7%.

On May 8, 2007, CSCO slid 5.3% in after-hours trade after the company beat expectations and guided mostly in line for its Q4. It headed slightly lower the following day, losing 6.5% by the closing bell.

On Feb. 6, 2007, shares gained 4.5% in the evening hours after the company reported a strong year-over-year gain in revenue but offered an outlook that straddled the Street view. The gain was trimmed to 2.9% the next day.

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