Arista Networks, Facebook Advance on Cisco

I recently attended the conference structure in 2015 in San Francisco, where we witnessed a wide range of information technology executives presentations largest providers of cloud computing and IT spenders.

Each year the conference focuses on emerging trends between the two titans of cloud computing and the largest IT spend, and the range of loudspeaker allows identification of these issues through a series of presentations by top the most important companies in cloud computing.

Software Defined Network (SDN) and cloud which remain a threat to Cisco Systems (ticker: CSCO) (nominal Under perform, target price of $ 22). With short-term slowdown in sales growth, we remain concerned about the long term when considering the impact of the SDN, threatening what remains to be the most profitable part of the IT stack. We believe that it will introduce competition in various points of the network and at the same time the impact will take time, the threat is very real, the dollars shrink gross profit for the entire network stack. We believe Facebook (FB) ambitions in networks and the rise of Arista Networks (ANET) are two distinct issues to deal with.

Arista (rated at Outperform, target price $ 90) is positioned to benefit from the public cloud transition. While the increase in domestic developments Facebook could pose a threat in the long term, the company is positioned to benefit disproportionately from growth Titans cloud with a silicon-based portfolio of commodities and a system of open and highly programmable operation, Arista EOS. This, along with the transition to 10 Gigabit Ethernet (GbE) and especially networking presents an opportunity for a history of secular and robust growth.

Although strategic work loads are likely to fall, the appeal of Amazon.com (AMZN) Web Services (AWS), Google (GOOGL) and Microsoft (MSFT) and affinity of the developers of these platforms platforms and potentially limits growth budgetary pressures in the International Business Machines (IBM) (nominal value of $ 125, Lower target price). Here we see the margin software and services a significant risk, our longstanding concerns lay because of the high equipment and attach the cannibalization of the transition to the cloud.

We believe that the secular impact of the cloud means that revenue growth for most of the traditional actors in the company remains difficult in terms of up and down. For Hewlett Packard Company (HPE) (rated at neutral, price target $ 19), we believe that it remains a headwind for much of the portfolio (storage servers, networks and services).