In a note ahead of Cisco Systems earnings, RBC networking analyst Mark Sue writes

Cisco may raise its dividend yield from 1.5% to ~ 2.2% at its September analyst day as it tries to convey some increased investor confidence. However, our view is that things are still under disarray internally as Cisco works to stem marketshare loss and reorganize, while laying off employees by the thousands. If anything, the demand environment may slow for Cisco following its FY end, implying that consensus CY12 EPS of $1.79 has a higher probability of moving lower following results next week.

All of the internal distractions at Cisco are the primary reason behind Cisco’s lack of competitive products and share loss, in our view. Cisco is revamping its switching products and doing what it can in routing, but in most situations Cisco has become dis-intermediated by more nimble players. Channel fatigue and low morale may also impact Cisco’s ability to reclaim lost share. Opex management and cost cutting may stabilize pretax margins at 25–26% but as Cisco reinvests in S&M to stem share loss, current opex reduction plans may only provide a temporary lift.