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Goldman Sachs wrote a note Monday morning on Cisco Systems (NASDAQ:CSCO), naming it "Buy/Attractive." The note reads:

What's Changed: Results for the 33nd issue of our IT Spending Survey series, conducted in mid-October 2006 are in. As in past surveys, we asked two questions related to overall network spending, and Cisco-related spending over the next 12 months. This survey's results indicate that corporate networking and Cisco-specific spending continue to have a positive outlook.

Implications: Corporate network spending should continue to outpace overall corporate IT spending for one simple reason, many IT decisions are now tied to the network. Corporate networks will become the backbone of other significant technology decisions. Fifty-five percent of respondents, within the recent narrow range of 50-70%, expect to increase spending with Cisco over the next 12 months. The 12-month forward outlook for corporate network spending looks positive with 72% of respondents surveyed expect to increase their spending over the next 12 months. Our proprietary analysis of Cisco's Ethernet port growth shows evidence that enterprise switching equipment has a rolling upgrade cycle centered on a five-year equipment life. We believe Cisco is a strong beneficiary of this upgrade due to its 70%-plus market share overall. End of life (34%), capacity upgrades (35%), and feature upgrades (31%) all play a dominant role in network upgrades.

Additionally, Cisco's recent aquisition of WebEx (WEBX) moves them further into the "on demand" area which rival Microsoft (NASDAQ:MSFT) has been several years ahead in. Cisco's brand reputation as a business of making routers is now shifting towards more "unified communications" intertwining mobile, Internet, and other services into a single system.

Disclosure: Shammara Hussein has a long position in CSCO.

Source: Goldman Upgrades Cisco Rating - For Good Reason