The Dow Jones Industrials (DJINDICES:^DJI) has benefited greatly from the first-quarter earnings season, as generally positive news helped send the average to new all-time highs. As earnings season draws to a close, Cisco Systems (NASDAQ:CSCO) is one of the last members of the Dow Jones Industrials to report. Investors expect Cisco to offer its unique read on the technology industry, building on earlier reports that fellow Dow member IBM (NYSE:IBM) and other companies have provided in assessing the health of the sector. What Cisco says could have a big impact on the Dow and the broader market on Thursday.
Cisco will report its results after the market closes this afternoon, with past quarters' releases coming around 4:05 p.m. EDT. The company's earnings conference call, scheduled to begin at 4:30 p.m. EDT, will include details on the results and a possible look at future strategy for the tech giant.
Cisco Systems has faced challenges in keeping revenue up, and investors are bracing for yet another drop in quarterly sales. This time, though, earnings might well fall from year-ago levels as well, and that's something that Cisco has generally been able to avoid in past quarters.
The bigger-picture issue for Cisco is one that IBM and other big players in technology are all dealing with simultaneously. In the past, most tech companies stuck to their traditional areas of expertise, largely avoiding moves into each other's territory. As a result, Cisco became the giant of network infrastructure in the late 1990s and rode the resulting wave of positive sentiment to briefly hold the biggest market capitalization in the U.S. stock market during the tech boom.
After the tech bust, industry members began looking for ways to take advantage of opportunities in other niches, and that led to more turf battles between Cisco and other big players. Cisco's past forays into consumer-targeted products and services didn't pan out as well as investors had hoped, and even as the company was trying to diversify its business, smaller players in the networking space stepped up to steal market share in its key core focus area.
Cisco Systems has responded to the highly competitive conditions in tech by working on two fronts. On one hand, Cisco is working hard to reestablish itself as a leader in its traditional networking products and services businesses. The company is also moving into higher-growth areas such as cloud computing and data collection and analysis, going up against IBM and other companies seeking to become full-service providers for enterprise customers with the biggest information technology needs.
With a long history of disappointment, Cisco Systems has set low expectations for its results. But a solid showing this afternoon could help lift the ailing tech-stock sector and push the Dow to even further heights.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.