Goldman Sachs is not enthused about Cisco (NASDAQ:CSCO) in the near term. That is because its analysts believe that in its main market of switches and routers, it will be hard to continue to grow at a fast pace, when budgets for infrastructures at enterprises and large service providers in the West are not growing significantly.
On the other hand, in places where there is still strong growth in infrastructure budgets - niches such as security, Internet load balancing, optimization and smart allocation of mobile bandwidth or video conference calls - Cisco faces stiff competition from companies with technologies that sometimes are better than its own. These are rivals such as Check Point Software Technologies Ltd. (Nasdaq: CHKP), F5 (NASDAQ:FFIV), Radware Ltd. (Nasdaq: RDWR), Riverbed Technology (NASDAQ:RVBD), and Polycom (NASDAQ:PLCM), as well as smaller companies which succeed in winning contracts from giant service providers, like Orckit Communications Ltd. (Nasdaq: ORCT) and Allot Communications Ltd. (Nasdaq:ALLT).
Allot shares, which at the low point of the crisis, in March 2009, were at $1.40, have risen five-fold since then, and with good reason. As far as I know, it is among the only communications equipment companies that succeeded in growing in 2009, despite the global economic crisis. Its solutions for optimal management of Internet resources in real time - DPI (deep packet inspection) - were chosen about a year ago by one of Europe's largest cellular services providers, which ordered about $17 million worth of equipment last year. Since then, the same giant customer continues to order and implement its unique solutions, which lessen its load in this era of heavy video traffic caused by smartphones.
While regulatory reasons have prevented the US market so far from fully opening up to DPI solutions, Allot is expected to continue its fast growth, because of strong demand from cellular providers in Europe, Asia, and South America.
On Thursday, the company reported another significant customer, Telefonica Brazil, which is implementing its solutions with enterprise customers. In my opinion, with a market cap of $170 million, and about $60 million in cash on hand, Allot is built for a significant acquisition which will boost its growth.
Published by Globes [online], Israel business news - www.globes-online.com - on November 9, 2010 © Copyright of Globes Publisher Itonut (1983) Ltd. 2010