Seeking Alpha

Wunderlich downgrades Cisco, worried about SDN/NFV alternatives

  • "We came away from industry interviews in recent weeks with the view that the market has less interest in the Cisco (CSCO +0.1%) product suite than in past transitions," writes Wunderlich's Matthew S. Robinson, downgrading to Hold. "We see the range of alternatives for network automation/software defined networking (SDN), network function virtualization (NFV), and cloud services as dilutive to the Cisco installed base upgrade opportunity."
  • Robinson also argues there's "more opportunity" in small cap/high-growth names, given their recent selloff. His PT has been lowered by $1 to $24.
  • Plenty of other analysts have raised SDN-related concerns for Cisco. Some have also brought up NFV, which aims to do for higher-level networking tasks (security, load balancing, etc.) what SDN tries to do for switching/routing (allow proprietary systems to be replaced with commodity hardware).
  • Cisco recently took another step towards fleshing out its SDN vision by unveiling its OpFlex protocol for interactions between SDN controllers and the hardware they manage. The company argues OpFlex is superior to the widely-embraced OpenFlow on account of supporting a greater level of networking intelligence, and preventing controllers from being a single point of failure.
  • Much like its ACI/Insieme platform, OpFlex drives home Cisco's efforts to keep customers from adopting rival SDN solutions by pitching an alternative that provides a rich feature set and deep network visibility, but is also linked to Cisco's proprietary hardware.
  • Shares have turned positive after opening lower.
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Comments (3)
  • bibrennan
    , contributor
    Comment (1) | Send Message
     
    While the issues addressed above are somewhat substantial in nature, Cisco's recent Cloud announcement will serve to significantly mitigate any proprietary concerns on the part of the industry.

     

    They will leverage their relationships with Cloud/Telco/SP providers to implement all the aforementioned technologies. This will accelerate adoption of their versions of SDN and OpFlex as they will have plenty of highly scalable references. Additionally, it will force the software development industry to write to their API's in the ACI/Inseme platform.

     

    Lastly, they will outpace all other cloud providers by leveraging their channel for large, global footprint
    8 Apr 2014, 12:55 PM Reply Like
  • combatcorpsmanVN
    , contributor
    Comments (1000) | Send Message
     
    There has been, and continues to be, a rotation out of momentum stocks into 'old line', top-tier Technology shares. This includes many of the Energy companies which are thinly-veiled technology companies as they locate, develop, and otherwise facilitate the development of formerly unreachable Oil and Natural Gas accumulations.

     

    Why anyone would go public now downgrading CSCO defies my understanding of when to buy a company's shares.

     

    I see this rotation as a impetus for a rise in CSCO's share price and numerous other tech companies pushing into and exploiting the Cloud.
    9 Apr 2014, 03:44 PM Reply Like
  • ks07078
    , contributor
    Comments (91) | Send Message
     
    Cisco needs to come up with at least one workable strategy soon. Consider these:

     

    . Core networking products such as switches routers facing huge pressure from Chinese huawei and others
    . Their 3 or 4 old cloud-like product in alliance with VMware, Emc didn't go anywhere due to complete focus on box and zero imagination or understanding of cloud computing
    . Now that aws, azure and a few others have become the cloud, Cisco is going to invest a mere 1b! I expect most of this will be wasted by them in buying smaller companies in desperation

     

    Otoh Cisco still has one of the biggest opportunities in thr cloud era - networking is the critical capability every company has to maximize to exploit cloud platforms. Cisco shud focus on innovating there, become the intelligent bridge.
    9 Apr 2014, 09:11 PM Reply Like
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