Shares of Cisco Systems (CSCO) this morning are down 86 cents, or almost 5%, at $16.92, extending the losses it suffered last night after the company beat fiscal Q3 estimates but offered a disappointing Q4 outlook and said it faced lots of hard work to get its business back on track.

I see two downgrades this morning:

Canaccord Genuity analyst Paul Mansky cut his rating to Hold from Buy and cut his price target to $20 from $24.

We applaud the bold corrective initiatives recently announced and can see wheels in motion that may have our prior Value/GARP thesis ultimately coming to fruition in 2012. However, the next two quarters (at minimum) will be execution heavy and catalyst light – exacerbated by switch segment scrutiny and anniversary of difficult comparisons. As such, we are stepping to the sidelines on what has been a challenged thesis and looking to re-engage as fundamentals show signs of stabilization – possibly late this (calendar) year.

And Jayson Noland with R.W. Baird cut his rating to Neutral from Outperform, with a $20 price target, down from $22. The two main threats at the moment, the deterioration of the switching business (sales down 9% last quarter) and the public sector market (sales down 8%) won’t be fixed “in the near to medium term” he thinks.

“We could see some upside to the stock given restructuring activities, but longer-term pricing and gross margin challenges will limit multiple expansion, in our view.”

Noland cut his estimate for this year to $42.98 billion in revenue and $1.60 in EPS, from a prior $43.92 billion and $1.62. For next fiscal year, beginning in August, he sees $45.8 billion in revenue and $1.82 in EPS, down from a prior $49.2 billion and $1.86.

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Charlie Wolf of Needham & Co., who last week cut his rating on Research in Motion (RIMM) to Hold for its failure to maintain competitive products, today initiated coverage of Motorola Mobility (MMI) with a Hold rating, writing that Moto’s strategy of riding Google’s (GOOG) “Android” coat-tails could become increasingly risky this year.

There are two risks, as he sees it: there will be a proliferation of smartphone licensees of Android (some would say there are already a plethora), and, closely tied to that, there is a risk that Moto won’t be able to sufficiently differentiate itself as Android devices become commodities.

Moreover, he sees the same risk to Moto’s efforts with Android tablets, despite the fact that its “Xoom” tablet has gotten positive reviews so far.

“Since Android phones run on the same operating system, the major risk facing Motorola and the other licensees is the Android platform could commoditize, sending margins into value-destroying territories.”

Because smartphone growth is exploding, and because the devices are sold through carriers, subsidies have kept Android from commoditizing — meaning, no one buys them on price alone, he implies. As smartphone growth slows, Wolf expects carriers to press Moto and other vendors for lower prices on a wholesale basis.

He notes, “Google has licensed Android to over 40 manufacturers; and the only option for many second-tier licensees, located in emerging markets, is to capture share through aggressive pricing rather than differentiating features and services.”

On the strength of 20% revenue growth, Motorola Mobility should earn $0.85 in 2011 as the company leverages the fixed components in its expense structure. We do not anticipate that Motorola Mobility will experience smartphone sales shortfalls or increasing margin pressures in 2011 because the Android platform itself is growing so rapidly. However, 2012 could be a different story. We expect Motorola Mobility’s revenue growth to slow to 15% in that year. We also expect that pricing and gross margin pressures will begin to emerge as growth in the Android platform slows. With little additional leverage available in its expense structure, Motorola Mobility’s 2012 earnings should rise modestly to $1.10 per share.

I would note Wolf’s estimate is higher than the 80 cents analysts are estimating this year, but the 2012 figure for $1.10 is well below the consensus $1.70.

Moto shares today are down 41 cents, or 1.6%, at $25.13.

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ThinkEquity’s Krishna Shankar this morning raised his rating on SanDisk (SNDK) shares to Buy from Hold, arguing that the industry economics for flash memory are “balanced.”

Shankar raised his price target to $60 from $50.

Shankar sees 75% to 80% bit growth for NAND flash in 2011 and 2012, and 30% to 35% decline in average selling price.

Further, Shankar sees Sandisk as having a lead in process technology, with partner Toshiba (TOSBF) at 24 nanometer and with 2 bits to 3 bits per cell, with a further advantage down the road at 19 nanometer with MLC technology.

Helping the company’s market outlook is that “marginal players” in DRAM in Taiwan and Japan have either left the business or consolidated, and that there are not likely to be more “greenfield” DRAM and NAND chip factories until the second half of this year.

Then, too, new devices such as tablet computers, and rapidly expanding product categories such as smartphones, are “voracious” consumers of flash memory.

The company is “among the best-managed semiconductor companies,” he writes.

Shankar is modeling revenue for SanDisk of $5.83 billion and $4.60 in EPS this year, versus the consensus $5.76 billion and $4.42 per share.

SanDisk shares are up 21 cents, or half a point at $47.36.

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Citadel Securities analyst Shing Yin today cut his rating on shares of Verizon Communications (VZ) to “Reduce” from Neutral, arguing that buy-side investors are unrealistic in how much they think Verizon can increase the number of users with smartphones, and how much it can increase its average revenue per user (ARPU).

The current multiple on the stock of 14 times projected earnings in 2012 is based on an expectation by investors that Verizon can beat the consensus $2.63 cents per share estimate next year, he thinks, but Yin sees the company just slightly exceeding consensus, turning in $2.66.

Yin calculates that Verizon would have to sell 33 million smartphones over the next three quarters to meet a goal of having 50% of its subscriber base “penetrated” by smartphones. He sees that as being unlikely given that such a rate of smartphone sales would constitute 100% of all postpaid device sales. Rather, he sees only 65% of all postpaid phone sales being smartphones, or roughly 22 million units, for a total penetration at year end of 44%.

Moreover, even though investors expect ARPU to rise with smartphone sales (more complex phones driving greater data contracts), Yin thinks that view doesn’t take into account the decline in ARPU among non-smartphone users at Verizon.

In Q1, he estimates, ARPU among non-smartphone-users dropped 86 cents, on average. He sees Verizon’s ARPU by the end of this year rising almost 6% to $56.39. “But we believe many investors are expecting ARPU to rise by 10% or more.”

Verizon shares today are up 22 cents, or 0.6%, at $37.78.

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Shares of Intel (INTC) are up $1.27, or 6%, at $21.13 following last night’s huge Q1 beat, with Intel surpassing the top end of its own forecast by $800 million.

Today, some folks are inclined to capitulate:

Christopher Danely with JP Morgan raised his rating to Overweight from Neutral, and raised his price target to $25 from $20.50. Danely had consistently warned of trouble with PC markets for Intel, and had maintained some of the lowest numbers on the Street, estimating $11.3 billion in revenue for the quarter and just 39 cents EPS. Danely now estimates $54.65 billion in revenue and $2.35 in EPS, up from $48.3 billion and $1.74, previously.

Another repentant fellow this morning is Craig Berger, with FBR Capital, who raised his rating to Outperform, with a $27 price target, from a prior Market Perform rating. Berger writes that he now concedes that “PCs and tablets/smartphones can co-exist and PC units can still grow (though likely at 8%–10% YOY now). Moreover, Intel stock is not only cheap at a P/E of 8.2 times, but could “provide downside nice protection” in what may be a “choppy period of macroeconomic pressure” for chips generally. He also concedes that, “Intel is successfully diversifying into software, cellular basebands, and embedded processors (where Intel has had nice success lately.”

Still, Berger adds, Intel did “benefit from some channel replenishment,” and it’s possible the Q2 outlook is presuming some channel fill that won’t show up. He also muses that investors “may not bid INTC shares up meaningfully no matter what earnings power is until more time can be spent assessing the smartphone/tablet cannibalization impacts on PC growth.”

But as to why everyone missed $1.3 billion or so in revenue for the quarter, theories abound in the writings of the analysts themselves:

Bullish!

Doug Freedman, Gleacher & Co.: Reiterates a Buy rating, while raising his price target to $28 from $27. Freedman argues the Street failed to anticipate the inventory snapback after a glut of PCs were burned off in Q4 of last year. And the Street failed to model how most of the replacement would be with higher-priced Sandy Bridge processors. At the same time, writes Freedman, “Some of the upside was driven by better than expected Sandy Bridge mix, NAND sales and the impact of McAfee and the wireless chip unit of Infineon Technologies AG (IFNNY) […] We now believe that the roll-in of these two should be more in the range of $3.6-$3.8bil vs. INTC’s prior statement of ‘over $3bil in CY11′.”

John Pitzer, Credit Suisse: Reiterates an Outperform rating and a $28 price target. “Bears will argue overshipping, inventory and too much capex – and will also need to push out by yet another qtr the dreaded “miss” – We get the structural concerns: tablets, smartphones, ARM and power – We don’t get the underappreciation of ASP leverage in core PCs, developing market growth, corporate refresh, server, cloud, storage and routers.”

Uche Orji, UBS: Reiterates a Buy rating, while raising his price target to $28.50 from $27. Orji makes four conclusions: “more than 50% of PC sales are now from emerging markets, making it inherently more difficult to track; desktops are performing better than expected, and with 1/3 of PCs in emerging markets built by white box makers, market data estimates don’t capture it all; ASPs were better than expected as Sandy Bridge drove a richer mix; Foxconn, Pegatron and Samsung are tracking better than the reporting Taiwanese ODMs we track.”

Hans Mosesmann, Raymond James: Reiterates an Outperform rating, while reiterating a $31.50 price target. “The PC growth issue is likely to set the stage for a debate on the Street in the coming weeks as mixed PC supply chain signals have invariably been perceived as negative over the past couple of months for any of the PC chip pure-plays,” writes Mosesmann. “It is also worth noting that 3rd party research such as IDC and Gartner represent PC shipments while Intel recognizes “chip” shipments. Add to the discussion the fact that Intel had a 14- week quarter in 1Q11 and that ASPs were up nicely and we see we are not too far off what the 3rd parties may be saying about 1Q11 PC growth.”

Bearish!

Michael McConnell, Pacific Crest: Reiterates a Sector Perform rating, writing that despite the beat, he thinks the shares will come under pressure as PC market data is bound to catch up with Intel: “With Q1 revenue upside at Intel largely driven by an inventory build-up at customers and a faster-than-expected recovery from the Sandy Bridge chipset design error […] we expect the significant disconnect between sequential growth in the company’s PC client business in Q1 and Gartner PC unit sell-through data, as well as a decline in notebook ODM unit sales of 10% last quarter to continue to weigh on the stock’s multiple until sell-through indicators emerge in the PC supply chain starting in May and June.”

Stacy Rasgon, Sanford Bernstein: Maintains a Market Perform rating on Intel shares, while raising his price target to $24 from $23 previously. He’s not buying the part of Intel’s story having to do with inventory write-downs leading to a surge in buying: “We believe it is unlikely that inventory flushing would have been enough to account for the wide discrepancy in Q1 PC and MPU shipments. We determine that Intel would have needed to see 3-4 weeks of their channel inventory draw down in order to attribute the entire discrepancy to an inventory issue (which we view as unlikely).” Rasgon writes he’s still “somewhat cautious on the company’s aspirations for the year (we are currently modeling PC unit growth of about 6% YoY).”

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Morgan Stanley’s european software analyst Adam Wood this morning raised his rating on shares of SAP AG (SAP) to Overweight from Equal Weight, with a €54 price target on SAP’s ordinary shares, arguing that the company’s “core” business is primed to “accelerate,” given that SAP is “in the sweetspot of enterprise IT spending.”

Morgan Stanley’s survey of U.S. chief information officers, as well as recent results from Oracle (ORCL) and Accenture (ACN), suggest enterprise IT spending is showing continued “momentum,” writes Wood. That fact should help SAP, combined with the fact that the company has made some important changes: “SAP has appointed new co-CEOs, revised its maintenance pricing structure and launched a series of new products that are reviving its reputation for innovation.”

Wood raised his 2011 revenue estimate to €3.83 billion from a prior €3.73 billion, and raised his 2012 estimate to €4.32 billion from a prior €4.08 billion.

Moreover, the 10% growth in combined license and software sales in 2012 that the Street is currently modeling can probably be achieved just on the basis of the core products, such as ERP, business intelligence and analytics, PLM, middleware, and database sales, writes Wood. Everything else — the HANA product, the Business By Design offering, and SAP’s mobility products — would be gravy, he argues.

SAP shares today fell 1.4% to €43.79 in European trading. American Depository Shares of SAP fell 57 cents, or 0.9%, to $63.48.

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MKM Partners analyst Tero Kuittinen today raised his rating on shares of Qualcomm (QCOM) to Buy from Neutral, with a $63 price target, arguing that the company is poised to get “notable new contracts” from Nokia (NOK), Research in Motion (RIMM), and Apple (AAPL).

Kuittinen now sees Qualcomm shipping 486 million units of its “mobile station modem,” up from an estimate of 483 previously, at an average price of $16.73 per unit, up from $16.29 previously. He estimates $3.15 per share in profit this fiscal year, up from $2.84 previously, and above the average $3.04 estimate on the Street.

Kuittinen writes that, “We believe Nokia is moving all of its Windows phone design to the San Diego center. In our view, this augurs the use of Qualcomm baseband and processor chips in all first-wave (i.e., Windows 7 Phone OS) Nokia phones.”

He also thinks RIM will, “execute a broad and rapid geographic expansion of the new Bold and Touch launches this summer in North America, Europe and Middle East [with] launches of the more advanced models using Qualcomm chips.”

As for Apple, the, “iPhone is naturally likely to be a top seller in the autumn; we also anticipate iPad sales to hit at least 40mn units in CY11. We believe Qualcomm does not have baseband in all iPads, and tablet sales in general are beginning to slant increasingly toward WiFi-only devices, so the tablet upside is not as clear as the handset momentum, in our view.”

Qualcomm shares today are up 29 cents, or half a point, at $53.52.

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Shares of Salesforce.com (CRM) are up $2.05, or 1.6%, at $133.48, after FBR Capital Markets analyst David Hilal raised his rating today on the shares to Ouperform from Market Perform, with a $170 price target, up from $150, after concluding that the company’s efforts to diversify from just a customer relationship tool into more lines of business is actually going better than he’d thought.

Hilal thinks the stock should get more credit, as it was down, prior to this morning, by 8% in the last three months, versus a 3% rise in the Nasdaq and a 10% rise for the software stocks that FBR follows. The main concern is that new software license bookings — which are tracked by the billings figure — are likely to decelerate this year to just 29% growth from 33% last year. But 29% is still “strong,” in Hilal’s view.

Hilal notes the various growth initiatives beyond the core sales app: the “Service Cloud,” currently in version 3, has added functions that have “closed the gap” with competitors’ offerings, including adding social networking functions. In that last regard, the company’s acquisition of Radian6 last week should help. The “Force.com” offering can turn Salesforce into a “platform vendor” instead of a vendor of disparate applications. The company has boosted Force.com’s appeal by adding the programming language Ruby, he argues.

Hilal’s $170 target represents a multiple of 49 times free cash flow in the fiscal year that ends in June of 2013, which is roughly 2 times the company’s projected growth rate, he notes, for a P/FC/G ratio of 2.

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Shares of American Superconductor (AMSC) are down $9.73, or 39%, at $15.15, still under heavy pressure from last night’s announcement that fiscal Q4 revenue will come in well below estimates because of a single customer failing to take delivery of the company’s products.

Today, I count at least six downgrades of the stock, and, of course, estimates have been cut everywhere, though some analysts are still citing enough uncertainty to refrain from offering new estimates.

Note that unlike most firms, American describes the fiscal year based on the calendar year in which it starts, not the one in which it ends. So the current fiscal year, which started this month, is referred to by American, and by all analysts, as “fiscal 2011,” rather than “fiscal 2012,” as one might assume:

Ben Schuman, Pacific Crest: Cut his rating from Outperform to Sector Perform. He cut his outlook for fiscal 2011 (ending March of 2012) to $318 million and 35 cents per share in earnings, down from a prior $463 million and $1.15 in EPS, and there may be more “adjustments” once Sinovel issues its annual report. He knew, writes Schuman, that elevated inventory at Sinovel was not sustainable, but ” We had hoped that Sinovel’s inventory—especially of 1.5 MW components—would burn off gradually. We are estimating Sinovel component shipments from AMSC of 2,457 in 2011, down from well over 6,000 in 2010.”

John Hardy, Gleacher & Co.: Reiterates a Hold rating on the shares, writing that the surprise with Sinovel, “is consistent with our view that working capital adjustments at Sinovel associated with slowing growth in China was/is the primary risk for the stock.” Hardy also thinks it’s possible American will not go through with its intended acquisition of Finnish wind-power engineering firm The Switch Engineering Oy, for $265 million, announced last month. “We question whether AMSC takes on added Chinese exposure given this latest development, and as a result no longer model the announced acquisition will close as expected in F2Q11.” Hardy cut his fiscal 2011 estimate to $356.6 million in revenue and 66 cents in EPS from $430 million and $1.35.

James Ricchiuti, Needham & Co.: Cuts his rating on the stock to “Under Review” from “Hold,” writing that there are “too many questions” to formulate a view for fiscal 2011. “With too many open questions regarding the timing and amount of future deliveries to Sinovel and the status of accumulated unpaid receivables from shipment deliveries to Sinovel from earlier in the FY, there simply is not enough information to formulate an earnings forecast for next year. This lack of clarity makes it problematic to provide an investment recommendation at this time.” Ricchiuti’s published estimate for this year stands at $465 million in revenue and $1.16 in EPS, but obviously that won’t be the case going forward.

Jesse Pichel, Jefferies & Co.: Cuts his rating on the stock to Underperform from Buy, and reduces his price target to $16 from $30. He cut his 2011 estimate to $292 million and 42 cents EPS from $462 million and $1.14. Beyond the simple matter of excess inventory at Sinovel, muses Pichel, it’s possible the company may simply have gone across the street to another vendor. “Although it is true that AMSC has the exclusive right to provide components for its licensees, there is no exclusive use of their license design. That is, an AMSC customer is free to license designs from another vendor and source components from elsewhere. Given Sinovel’s sudden action before the start of its second contract, we cannot discount this possibility.”

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Oppenheimer & Co.’s Rich Schafer was the other analyst upgrading Broadcom (BRCM) shares today, along with DA Davidson’s Aalok Shah, whom I mentioned earlier. He raised his rating on Broadcom from “Perform” to Outperform, and set a $55 price target, after a 19% decline from a recent high in January.

Broadcom is “one of the few remaining large-cap semiconductor growth stories,” in Schafer’s view.

Schafer thinks that some people came away with too dour a view on Broadcom’s operating expense trajectory when the company reported Q4 results on February 1st.

“1Q’s higher OpEx outlook proved a negative inflection point and some still question mgmt’s commitment to expense control. We expect OpEx to lag the top line going forward and see little need to accelerate spending.”

Schafer also thinks revenue growth projected at about 15% this year could be higher for Broadcom thanks to the “connectivity megatrend” in mobile and wireless devices, especially with Apple (AAPL) an “anchor customer” for Broadcom’s WiFi plus Bluetooth plus FM “combo” radio chips.

Broadcom shares today are up $1.20, or 3%, at $39.65.

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