Cisco's recent targeting scared investors because stocks have plummeted.
Currently the company goes to another model, which is a temporary obstacle.
This population still offers great value to shareholders in the meantime.
After the release of Cisco's most recent results (NASDAQ: CSCO), it was clear that investors were far from satisfied with what the administration had to say. The low guidance that was given was reason enough for many shareholders to dispose of their shares. A drop of ten percent of the stock price was the consequence. However, it is important to reconsider the company and its valuation to determine if it is advisable to follow these investors and stay away from this population or if this decrease has created the opportunity to invest at lower levels. I think this is the last, since Cisco still has great potential.
The numbers
The quarterly report that preceded the sale was issued on May 17 and contained third quarter results. While Cisco saw its sales decline of 1% year-over-year, the company managed to exceed analysts' expectations for sales and its EPS. Part of the reason for the decline in revenue is due to the fact that the third quarter was a shorter week this year compared to the previous year. That makes a difference of about 265 million, of which 200 million were in services and another 65 million SaaS business. This means that the company would not have seen revenue decline year on year if the number of weeks in the quarter had been identical. At the same time, it saw its EPS year-on-year increase of $ 0.03 to $ 0.60.
So it does not look too bad. Cisco has performed well during the quarter, with a slight drop in revenue as a result of a difference in the number of weeks. The main problem that investors have in this publication was that management had driven down year-on-year turnover from 4 to 6% for the next quarter. I understand the concern of investors facing this negative trend, but I think it is not as bad as some people think.
Monday 29 May 2017
Sunday 14 May 2017
Even With Slight Stumble, Cisco's Strong Ethernet Switching Position Fuels My Confidence
Cisco (NASDAQ:CSCO) is one of those stocks that left a lot of investors broken hearts after the latest bull markets. The internet stock bubble hit Cisco shareholders particularly hard, as it was one of those stocks that had a P/E over 100 for quite a while.
Like many technology stocks at that time, earnings didn't have to be that impressive as long as fools were buying and greater fools were buying at higher prices. Looking back at the growth during that time, which for revenue and net income was above 10% at the beginning of the bubble, it was a good business model indicator, but not enough to justify the crazy valuations to follow. The 2009 bear market hit CSCO shareholders as well, but the losses were not nearly as destructive as in the early 2000s. You can attribute this difference to the difference in valuations.
Nowadays, the stock is trading at much more reasonable valuations. Growth, while not as pronounced as the early days, is still fairly reasonable and is moving towards a consistent long-term trend. CSCO was a stock I really liked back in February 2016, so I recommended it in The Sather Research eLetter and added it to the Real Money Portfolio of the eLetter. Since then, the stock has returned about 48.1% including dividends.
With a current 6-year streak of consecutively increasing the dividend and a growth rate of 24.7% over the last 3 years, the potential returns from dividends only add to the attractiveness of this stock - one that has been on a tear over the past couple of years. The dividend yield reached as high as 3.7% around the time I added the position, which combined with the recent dividend growth rate creates a very high potential yield on cost for the foreseeable future.
The current yield of 3.47% may attract more yield seeking investors moving forward, hopefully pushing up the stock higher as others wish to participate in the party.
Like many technology stocks at that time, earnings didn't have to be that impressive as long as fools were buying and greater fools were buying at higher prices. Looking back at the growth during that time, which for revenue and net income was above 10% at the beginning of the bubble, it was a good business model indicator, but not enough to justify the crazy valuations to follow. The 2009 bear market hit CSCO shareholders as well, but the losses were not nearly as destructive as in the early 2000s. You can attribute this difference to the difference in valuations.
Nowadays, the stock is trading at much more reasonable valuations. Growth, while not as pronounced as the early days, is still fairly reasonable and is moving towards a consistent long-term trend. CSCO was a stock I really liked back in February 2016, so I recommended it in The Sather Research eLetter and added it to the Real Money Portfolio of the eLetter. Since then, the stock has returned about 48.1% including dividends.
With a current 6-year streak of consecutively increasing the dividend and a growth rate of 24.7% over the last 3 years, the potential returns from dividends only add to the attractiveness of this stock - one that has been on a tear over the past couple of years. The dividend yield reached as high as 3.7% around the time I added the position, which combined with the recent dividend growth rate creates a very high potential yield on cost for the foreseeable future.
The current yield of 3.47% may attract more yield seeking investors moving forward, hopefully pushing up the stock higher as others wish to participate in the party.
Tuesday 2 May 2017
Cisco Is Paying $610 Million For This Networking Startup
The second acquisition of Cisco in the new year is another great.
The giant network said on Monday it expects to pay $ 610 million to start Viptela, which sells a network technology that allows companies to connect their branch offices to corporate data centers.
Viptela, founded in 2012 by ex-Cisco engineers (CSCO) has invested nearly 110 million dollars of investment. The start of the $ 75 million financing cycle in May 2016 earned him a pre-financing assessment of $ 825 million, according to the Pitchbook investment tracking site.
The latest Cisco transaction following the acquisition of $ 3.7 billion AppDynamics senior corporate software company that closed in March.
A Cisco spokesman said the company expects "most Vitpela employees" to join Cisco and "share more details in the coming weeks." Viptela has about 120 employees, according to Pitchbook.
In January, Praveen Akkiraju, a former Cisco fighter 19, senior vice president of its business networking group, became the new CEO of Viptela.
The acquisition is the fact that Cisco's core switching and routing activities gradually declined as new companies refuse to buy data center equipment and at the same time buy IT resources at the request of giants like Amazon web services (AMZN) and Microsoft (MSFT). To offset declines, Cisco has invested heavily in software through major acquisitions such as AppDynamics and the purchase of $ 635 million in OpenDNS 2015 security.
The acquisition of Cisco gives a vendor who sells much of its technology through AWS, which could help gain more customers using cloud services instead of buying data center equipment. Nearly 90% of Viptela customers use a version of their network technology provided by AWS, according to an article published in January in the specialized SDX central publication.
Competitors include other Viptela companies such as CloudGenix and Network Networks.
It is not clear if Cisco will keep the Viptela name. Cisco spokesman said "it is too early to make that decision."
The agreement must be completed in the second half of 2017.
The giant network said on Monday it expects to pay $ 610 million to start Viptela, which sells a network technology that allows companies to connect their branch offices to corporate data centers.
Viptela, founded in 2012 by ex-Cisco engineers (CSCO) has invested nearly 110 million dollars of investment. The start of the $ 75 million financing cycle in May 2016 earned him a pre-financing assessment of $ 825 million, according to the Pitchbook investment tracking site.
The latest Cisco transaction following the acquisition of $ 3.7 billion AppDynamics senior corporate software company that closed in March.
A Cisco spokesman said the company expects "most Vitpela employees" to join Cisco and "share more details in the coming weeks." Viptela has about 120 employees, according to Pitchbook.
In January, Praveen Akkiraju, a former Cisco fighter 19, senior vice president of its business networking group, became the new CEO of Viptela.
The acquisition is the fact that Cisco's core switching and routing activities gradually declined as new companies refuse to buy data center equipment and at the same time buy IT resources at the request of giants like Amazon web services (AMZN) and Microsoft (MSFT). To offset declines, Cisco has invested heavily in software through major acquisitions such as AppDynamics and the purchase of $ 635 million in OpenDNS 2015 security.
The acquisition of Cisco gives a vendor who sells much of its technology through AWS, which could help gain more customers using cloud services instead of buying data center equipment. Nearly 90% of Viptela customers use a version of their network technology provided by AWS, according to an article published in January in the specialized SDX central publication.
Competitors include other Viptela companies such as CloudGenix and Network Networks.
It is not clear if Cisco will keep the Viptela name. Cisco spokesman said "it is too early to make that decision."
The agreement must be completed in the second half of 2017.
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