Getting the World Wired By Bill Alpert
Highlighted companies: Cisco (CSCO), Juniper (JNPR), Polycom (PLCM), Radvision (RVSN), Alcatel (ALA), Avaya (AV), Microsoft (MSFT)
Summary: Data-networking giant Cisco has apparently found its desperately-needed new growth horizons in these emerging fields: internet video, cable companies pursuing the 'triple play' market, emerging economies, and corporate IT investment. Cisco stock has risen 40% since early August, yet still trades at 18.8 times next year's projected earnings - lower than its peers. Cisco's CSR-1 router, designed to beat competitor Juniper's high-end telecom product, has taken that market by storm and now offers cable and telecom companies the ability to route 'triple play' (internet, voice, and TV) data over a single network protocol. This, while traditional telecom suppliers like Lucent and Nortel have seen demand for their products wither. Meanwhile, corporations are moving toward Cisco's 'unified communications' solution for e-mail, IM, collaboration, security and telephony, and showing a remarkably high satisfaction rate from Cisco products and service. Microsoft is a looming competitor in this unified enterprise communications market, however, with software-based solutions running on alternate computer-to-computer networking.
Quick comment: Cisco's most recent earnings conference calls • Andrew Schmitt says these trends are the end of telecom as we know it but that Cisco's strong-armed domination of its sector can't last forever • Shlomi Cohen takes a closer look at Cisco partner Radvision • Like the networking sector in general? The iShares Networking ETF (IGN) is the way to play it
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