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Cisco (NASDAQ:CSCO) is a tech company that produces Internet routers and switches used for voice and data transmission. Like many top international companies, Cisco has had its share of challenges this year. However, it is now following a new direction that, in my opinion, makes the stock a good buy for investors who are focused on long-term investment. The company has continued overhauling its internal structure, and has made six new acquisitions during 2012.

In July, Cisco acquired Virtuala in its bid to increase its cloud security portfolio. The company's most recent purchase made on Sept. 26 was ThinkSmart Technologies, an Ireland-based startup software firm that uses Wi-Fi technology to develop location analysis solutions. Many analysts consider these recent acquisitions to be smart moves that will soon prove central to improving Cisco's growth. Cisco intends to integrate ThinkSmart Technologies into its Mobility Service structure and its Wireless Networking Group.

Cisco's latest range of products, such as the Nexus 1100 Ethernet switch series and the Nexus 3548, offers the prospect of improved sales and profits for the company. The new Nexus tools offer improved security technology that helps network management teams monitor and control service policies from a single point of reference. According to its 2012 first-quarter financials, Cisco already tops the global switch market with about 65% share, while its closest rival, Hewlett-Packard (NYSE:HPQ), trails behind at some distance with 8.3% market share. Despite its current market dominance in Ethernet switches and routers, Cisco's newest buy promises to help the software and hardware company maintain dominance in the networking business.

Cisco's Business Prospects

As part of its business strategies, Cisco believes that the latest acquisitions help it expand its operations into new areas and markets. Cisco acquired Lightwire Inc. on Feb. 24, 2012, to improve its market share in routers and switches, and it acquired NDS Group Ltd. on March 15, 2012, to improve its offerings in video-related entertainment services. ClearAccess and Truviso Inc. were acquired on March 28, 2012, and May 3, 2012, respectively, to increase Cisco's network management experience. All these deals, including Virtuala and ThinkSmart, are key decisions that make Cisco stock attractive to value investors, as the acquired companies offer essential products and services to customers. Indeed, many research analysts are already bullish on Cisco long term, and it is hoped that the current momentum will continue in 2013.

What the Acquisition of ThinkSmart Technologies Means to Cisco

Cisco is looking to use ThinkSmart Technologies to enhance its wireless networking service and to service customers by providing location analytics solutions and intelligence. The analytics solutions will enable Cisco's customers to understand what is happening in their localities and also help them engage their end users more efficiently.

Cisco's Valuation Metrics and Outlook

Cisco's acquisitions to date indicate that the company is becoming well-positioned as a global market leader that manages market challenges adroitly. The company is growing rapidly in all key indexes, such as earnings per share, revenue growth, net income, and return on equity. Cisco's financials over the past two years have shown positive growth in earnings per share. Though its price/earnings ratio of 12.5 is average in its industrial sector, its return on equity exceeds the industry average as well as the S&P 500.

Long term, Cisco's earnings potential is great considering that it has already overhauled its product lines. Many analysts, including those at Goldman Sachs and JPMorgan, hold the opinion that Cisco is a safe tech stock even in a worsening economic scenario. I'm long on Cisco and I recommend its stock without any reservation.

Disclosure: I am long CSCO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: An Update On Cisco's Recent Acquisitions