Cisco investing up to $1.35B in Mexico; more on JPMorgan's downgrade

|About: Cisco Systems, Inc. (CSCO)|By:, SA News Editor

A month after announcing it will invest up to $4B in Ontario over the next ten years, Cisco (CSCO -0.7%) says it will directly and indirectly invest up to $1.35B in Mexico.

The spending will be tied in large part to the expansion of product sourcing in Mexico via contract manufacturers, and the development of a local support center. Though Cisco only has 600 employees in Mexico, manufacturing partners have over 5,800 dedicated to making Cisco hardware.

Back in August, Cisco announced it's cutting 4K jobs (5.5% of its workforce) globally.

Meanwhile, JPMorgan's Rod Hall, who has downgraded shares to Underweight, says he's worried about emerging markets weakness, along with delays in switch purchases caused by the adoption of software-defined networking (SDN).

Cisco saw a 12% Y/Y drop in emerging markets orders in its Oct. quarter (thanks in part to NSA-fueled China weakness), and John Chambers stated last month emerging markets remain "extremely challenged," even as the U.S. shows signs of improvement.

SDN growth is viewed as a long-term threat to Cisco, but major enterprise uptake isn't expected before 2015, and major carrier uptake could take longer still.