Cisco (CSCO) becomes the tech giant to receive an estimate cut: Sterne Agee's Shaw Wu claims...

Cisco (CSCO) becomes the tech giant to receive an estimate cut: Sterne Agee's Shaw Wu claims checks indicate sales cycles are lengthening and deal sizes are diminishing (in-line with Cisco's commentary). Europe, unsurprisingly, is the most troubled region. Still, Wu asserts the problems are industry-wide, and Cisco is gaining share. Recent guidance cuts/warnings from Acme Packet, Adtran, and Calix have heightened worries about a soft telecom capex environment.

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Comments (2)
  • Neil459
    , contributor
    Comments (2636) | Send Message
    Cisco is in that part of the growth curve were a company either prospers or dies. They had great products, but are being beat at their own game. They long had the image of "You'll never get fired buying CISCO." But that's gone now because their networking products are so overpriced. They are overpriced because they do not think they have to be price competitive.


    Not saying Cisco products don't work great, but they are too overpriced. And buying Linksys to cheapen their brand did not help. They are either going to have to provide Cisco quality at a lower price or they are on the downhill slope. If they start providing lower quality at lower price then they are done. We'll see.
    13 Jul 2012, 11:33 AM Reply Like
  • gigabob635
    , contributor
    Comments (326) | Send Message
    Cisco is turning the tide with their renewed focus and refreshed product lines. Their value is growing integration across product families as Nexus and UCS switches and servers grow into a tightly integrated solution set. The real issue is that - no surprise - as John Chambers declared to the financial community 3 months ago - just weeks before the Greek Crisis and the French elections - that Europe was starting a major slowdown. Guess what? In an interconnected global economy - when one market drops - it affects suppliers in a ripple motion as we now see in China and now in the US. That actually helps Cisco.


    Cisco won't make their ambitious numbers - but neither will anyone else as the avaialble market shrinks due to project postponements and defunding. However Cisco will grow market share. In a period of economic retrenchment - marginal projects are cut and only the highest profile, largest impact projects get funding. For these high visibility projects, the major concern is not on infrastructure prices - but risk of failure. Cisco's "safe-bet" status asserts itself by delivering well understood solutions with plenty of available support resource. After all - these days infrastructure costs are a small part of the total solution - with software costs, licensing and services comprising more than 70%.


    I expect the market to whack Cisco in August as they report the numbers that John warned of 3 months ago, before any other IT company could articulate the magnitude of the European crisis and its impact of the global economy. This will be a buying opportunity as Cisco springs back, leverages market share gains against competitors- while continuing to pump out a nice dividend.


    I am long CSCO, INTC, MSFT, GE and AAPL
    13 Jul 2012, 12:24 PM Reply Like
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