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Yesterday, 11:22 AM
- Believing further downside is unlikely and that the company's dividend (3.7% current yield) could be hiked in FQ3, Macquarie's Rajesh Ghai has upgraded Cisco (CSCO -1.3%) to Neutral ahead of the company's Wednesday afternoon FQ2 report.
- Ghai, whose target remains at $26, still has long-term concerns about the health of Cisco's core switching and routing ops. He launched coverage on Cisco at Underperform last August, when shares were at $27.92.
- Meanwhile, Goldman's Simona Jankowski (a long-time bull) has pulled Cisco off her firm's Conviction Buy list, while maintaining a Buy rating. Jankowski states Goldman's latest corporate IT survey points to weak 2016 U.S. demand, and is also worried about forex pressures.
- Credit Suisse's Kulbinder Garcha is reiterating an Underperform rating and $22 target, while once more citing concerns about the long-term impact of software-defined networking (SDN) on Cisco's sales/margins. "[N]ear-term IT data points remain mixed largely due to less visibility around service provider spending and global macro ... Despite [Cisco's] potential near-term momentum, we remain concerned regarding the impact of SDN threatening what remains the most profitable part of the IT stack."
- Last week: Cisco receives cautious pre-earnings Oppenheimer note
Wed, Feb. 3, 4:32 PM
- Jasper Technologies provides a platform for creating, managing, monetizing, and automating IoT services for Web-connected embedded devices. Cisco (NASDAQ:CSCO) is buying the company for $1.4B in cash and assumed equity awards, plus retention-based incentives.
- Cisco: "Jasper is the industry's leading IoT service platform in terms of number of enterprises and service providers ... Jasper develops and provides a SaaS platform with a predictable, recurring revenue IoT business that manages and drives a wide range of connected devices and services for more than 3500 enterprises worldwide, working with 27 service provider groups globally."
- The purchase comes 7 months after Cisco unveiled its IoT System, which aims to provide an end-to-end hardware, software, and services platform for IoT-related deployments. IBM, Microsoft, and Amazon are among the other major IT names to have shown a strong interest in IoT services.
- In October, Cisco announced the purchase of ParStream, a startup providing a database for IoT data. The company has made a slew of acquisitions in recent years to grow its software/services exposure amid ongoing hardware pressures. FQ2 results arrive on Feb. 10.
Wed, Feb. 3, 11:58 AM
- An ITC administrative law judge (ALJ) has ruled (.pdf) Arista (NYSE:ANET) infringes claims within Cisco's (NASDAQ:CSCO) '537, '592, and '145 patents. No violation has been found for asserted claims in Cisco's '597 and '164 patents. The case will now go before the ITC commission.
- Though Cisco is taking a victory lap and declaring the infringed IP "[goes] to the core of Arista's products," analysts aren't worried about the ruling's impact on Arista. Gabelli's Hendi Susanto: "Arista intends to fully address the infringement allegations with a new release of EOS (operating software platform) available for software download in Q2 2016 ... We believe Arista Networks has been working on all potential workaround for all patents in its legal battle against Cisco."
- Stifel's Sanjiv Wadhwani: "Conversations with customers indicate that customers are fine with the result, and do not see it as a material impact." He adds the ALJ will approve or deny Arista's workaround for two of the patents the company was found to infringe in the next 30 days, and that the other patent only covers how external agents interact with Cisco's system database (SysDB), and not a SysDB itself.
- Last week, Arista countersued Cisco, accusing the networking giant of violating antitrust law by engaging in bait-and-switch tactics regarding industry adoption of its CLI commands. An ALJ ruling on a separate Cisco ITC suit against Arista is expected on April 26.
- Arista, hammered more than once since Dec. 2014 on Cisco lawsuit concerns, is rallying on a bad day for tech stocks. Q4 results arrive on Feb. 18.
Tue, Feb. 2, 9:00 AM| Tue, Feb. 2, 9:00 AM | 1 Comment
- January monthly performance was: -4.6%
- 52-week performance vs. the S&P 500 is: -1%
- $0.02 in dividends were paid in January
- Top 10 Holdings as of 12/31/2015: Coca-Cola Co (KO): 4.05%, Microsoft Corp (MSFT): 3.61%, Apple Inc (AAPL): 3.27%, Altria Group Inc (MO): 3.17%, AbbVie Inc (ABBV): 2.84%, International Business Machines Corp (IBM): 2.21%, McDonald's Corp (MCD): 2.01%, Intel Corp (INTC): 1.95%, Cisco Systems Inc (CSCO): 1.9%, Home Depot Inc (HD): 1.84%
Mon, Feb. 1, 10:32 AM
- Citing channel checks, Oppenheimer says it expects Cisco's (CSCO -1.8%) FQ2 (Jan. quarter) results to be in-line with consensus when the company reports on Feb. 10, but with potential downside. The firm has cut its target by $2 to $30, while reiterating an Outperform rating.
- Cisco is ~$1 above a 52-week low of $22.47 (set on Jan. 20); the Nasdaq is down 0.7%. Shares sold off in November after the networking giant issued soft FQ2 guidance and reported only 3% Y/Y product order growth in tandem with its FQ1 beat. Macro pressures and forex were blamed.
- Last week, top carrier router rival Juniper tumbled after providing soft Q1 guidance blamed on "the uncertainty of the near term global macro environment and potential lumpiness in customer investment patterns." IBM, Apple, and other tech companies have reported seeing Chinese macro weakness.
Wed, Jan. 27, 3:58 PM
- AT&T, Verizon, Deutsche Telecom, SK Telecom, and other major carriers have thrown their weight behind Facebook's Open Compute Project (OCP), an increasingly popular initiative to create open-source designs for cheap/power-efficient servers, storage systems, and networking hardware.
- OCP could aid carrier efforts to adopt network functions virtualization (NFV), which allows switching, routing, and other networking functions to be handled by software running on commodity hardware. AT&T aims to virtualize over 75% of its network functions by 2020, Verizon, meanwhile, has been testing commodity switches running on software supplied by startups.
- Switch/router giant Cisco (CSCO -1.3%) could see its carrier sales pressured if OCP-based hardware is widely adopted by telcos. Facebook has been contributing modular data center switch designs to OCP. Meanwhile, startup Big Switch Networks has contributed a Linux-based network OS that supports switching and routing.
- Intel (INTC -0.6%), on the other hand, could benefit, as many OCP designs rely on the company's CPUs. On its Q4 earnings call (transcript), Intel estimated it had less than 10% telecom/networking penetration, and predicted the market would be a 2016 growth driver for its Data Center Group (DCG). The company also talked up its networking opportunity during its November investor day, and noted AT&T, Verizon, Vodafone, and SK Telecom have deployed Intel-based NFV solutions.
Mon, Jan. 25, 5:41 PM
Mon, Jan. 25, 5:00 PM
- Two days before an ITC administrative law judge (ALJ) issues an opinion on a Cisco (NASDAQ:CSCO) infringement suit against data center switch rival Arista (NYSE:ANET), Arista has filed an antitrust suit against Cisco, alleging the company engaged in a "bait-and-switch" tactic related to the command-line interface (CLI) commands used for programming its switches and routers.
- Arista argues Cisco encouraged industry adoption of its CLI commands (helping turn them into an industry standard), and then asserted copyright protection to hurt rivals. "Until December 2014, Cisco never suggested that it claimed copyright protection in the set of functional commands that most of the industry uses. This litigation is not about protecting copyrightable expression in commonly used CLI commands ... this litigation is an effort to debilitate a company that is disrupting Cisco’s long-standing dominant position in this market with better technology."
- In addition, Arista alleges Cisco illegally raised prices for Smart Net service and support contracts for customers using rival hardware in tandem with Cisco's. Cisco, for its part, declares Arista's suit to be "a smokescreen to divert attention from the important ruling expected from the ITC later this week," and "a pretext to delay the CLI District Court case scheduled for November."
- Arista fell hard in September after the ITC staff concluded (ahead of the ALJ's ruling) the company infringed Cisco's IP. This week's ALJ ruling will likely be followed by a decision from the ITC commission later in 2016. An ALJ is set to rule on a separate Cisco suit against Arista on April 26, and a federal Cisco suit against Arista has been put on hold pending the outcome of the ITC cases.
- Arista fell 6.9% today amid a 1.6% Nasdaq drop. Cisco fell 0.9%.
Wed, Jan. 20, 11:47 AM
- Tech large-caps aren't being spared as the Nasdaq drops 2.6%, and the S&P 2.7%, in the market's latest plunge. A slew of companies with $10B+ market caps are seeing declines that on many recent days were largely reserved for smaller ex-momentum plays.
- The casualty list includes Alibaba (BABA -5.3%), and that of course means Yahoo (YHOO -6%) is along for the ride. Top Alibaba rival JD.com (JD -6.2%) is also down strongly; Chinese macro fears continue to run high.
- Facebook (FB -4.9%), which (unlike most peers) remains well above where it traded 12 months ago, has fallen towards $90. Q4 results arrive on Jan. 27.
- Cisco (CSCO -5.2%) has fallen below $23. Possibly weighing: Piper's Troy Jensen has reported weak Q4 networking reseller survey results, and predicts Cisco will issue light FQ3 (April quarter) guidance next month with its FQ2 report. His FQ3 sales estimate has been cut by $400M to $11.9B (below a $12.07B consensus).
- DRAM/NAND flash maker Micron (MU -10.3%) is among the biggest decliners, with shares falling into the single digits. Micron now trades for 6.6x an FY17 (ends Aug. '17) EPS consensus of $1.48. Online payments leader PayPal (PYPL -4.4%) is having a rough day as well.
- IBM (IBM -4.7%), meanwhile, has made new multi-year lows after providing soft 2016 EPS guidance to go with a slight Q4 beat. Netflix (NFLX -6%) has sold off in spite of reporting strong Q4 subscriber adds.
Mon, Jan. 4, 5:31 PM
- While the Nasdaq dropped 2.1%, Arista Networks (NYSE:ANET) fell just 0.5% after catching an upgrade to Outperform from Oppenheimer's Ittai Kidron, who argues worries related to Cisco's (NASDAQ:CSCO) patent/copyright litigation against Arista are overblown. His target is $90.
- Kidron: "We've had a positive view on Arista's outlook and execution for some time, yet the potential for an adverse outcome in its IP litigation with Cisco has kept us cautious. Following detailed work and discussion with experts, we're convinced that, while Cisco will likely win in some of its patent claims, it will not disrupt Arista's business. We view related share pullbacks as a buying opportunity. Fundamentally, we view cloud as an opportunity rather than a risk and see TAM expansion into routing with [Broadcom's Jericho chip]. Given Arista's solid execution, we're confident in its ability to capitalize on the upcoming opportunities and to successfully navigate through the legal minefield ahead. Our Street-high estimates remain unchanged."
- Arista has succeeded in beating revenue expectations for every quarter since its June 2014 IPO. Shares rallied in November following a Q3 beat and strong Q4 guidance.
- Previously: Needham names Arista a top networking/optical pick.
Dec. 31, 2015, 7:03 PM
- Cisco (NASDAQ:CSCO) could make a bid for storage array vendor NetApp (NASDAQ:NTAP) and threat-prevention hardware/software provider FireEye (NASDAQ:FEYE) in 2016, thinks FBR's Dan Ives. Cisco/NetApp speculation has been around for a while. Meanwhile, Cisco has made several security acquisitions in recent years, and appears to be up for more, but has also launched products that compete with FireEye.
- Ives also thinks IBM could bid for machine/log data analytics software leader Splunk (NASDAQ:SPLK) and business intelligence/data visualization software firm QLIK. With a $7.6B market cap and high multiples, Splunk would be a costlier acquisition than IBM's traditional fare.
- HP Enterprise (NYSE:HPE), meanwhile, is seen as a potential suitor for both Qlik and enterprise cloud storage/file-sharing leader BOX. And Oracle (NYSE:ORCL) a potential buyer of cloud ERP, HR, and e-commerce software firm NetSuite (NYSE:N). Larry Ellison owns a large stake in NetSuite (more SMB-focused than Oracle), and the company both competes and partners with Oracle.
- Microsoft (NASDAQ:MSFT), which has made plenty of acquisitions in the Satya Nadella era, is seen as a potential buyer of database security software and Web app firewall vendor Imperva (NYSE:IMPV), as well as of cloud vulnerability management and compliance software firm Qualys (NASDAQ:QLYS). Symantec (NASDAQ:SYMC), which has signaled it will make security acquisitions after the sale of its Veritas unit closes, is considered a possible acquirer of e-mail/compliance security software provider Proofpoint (NASDAQ:PFPT).
- Yesterday: FBR sees improving cybersecurity spend, likes several stocks
Dec. 31, 2015, 11:29 AM
- Aided by strong smartphone and telecom equipment sales in emerging markets, Huawei expects to report its 2015 sales rose 35% to RMB390B ($60B), topping a prior target for 20% growth.
- The closely-held Chinese company adds it saw a "solid increase in profits and cash flow." A formal annual report typically arrives around early April.
- Though its networking and telecom equipment is blacklisted by many U.S. enterprises and carriers due to security/spying fears, Huawei's strong growth elsewhere (aided by aggressive pricing) has made it a thorn in the side of everyone from Samsung (OTC:SSNLF) to Cisco (NASDAQ:CSCO) to Nokia (NYSE:NOK) and Ericsson (NASDAQ:ERIC). IDC estimates Huawei had a 7.5% Q3 smartphone unit share on the back of 26.5M shipments (+60.9% Y/Y).
Dec. 29, 2015, 8:40 AM
- A U.S. appeals court has cleared Cisco (NASDAQ:CSCO) of infringing another company's Wi-Fi technology, reversing a $64M judgment against the networking equipment maker in a long-running patent dispute.
- After eight years of litigation that included a trip to the U.S. Supreme Court, the ruling stated that Cisco was not liable for directly infringing a patent held by Commil USA on a way to help spread wireless signals over a large area.
Dec. 8, 2015, 3:18 PM
- It's been a rough run for value stocks over the past few years, but the metric used to determine value - price/book - may not be the right one, says Citi's Robert Buckland. Free-cash-flow yield is better, he argues. noting this metric tracked traditional value in the 1990s and 2000s, but has easily outperformed over the past decade.
- It's a sign of the times, he says, as FCF is a "capex-suspicious metric," and investors are concerned about the economic outlook, and cynical about capital allocation decisions of managements.
- The list of 28 U.S. value (as defined by FCF yield) plays: BHI, VIAB, WFM, ANTM, HPQ, ABC, LBTYA, M, AAPL, CTL, XRX, LYB, CMI, ETN, MRK, VLO, CSCO, WRK, IBM, LVS, ESRX, IP, CAH, ADM, INTC, CAT, ABBV, EMN
Dec. 2, 2015, 12:52 PM
- Nimble Storage (NYSE:NMBL) has unveiled new hardware/software reference designs (referred to as Cisco Validated Designs) that pair Nimble's flash/disk arrays with Cisco's (NASDAQ:CSCO) UCS servers, data center switches, and ONE management software. The company has also introduced a reference architecture for using its arrays and Cisco gear with Microsoft's SQL Server 2014 database.
- Nimble states its SmartStack offerings (they make use of Cisco hardware) have been deployed by 750+ enterprises to date. The solutions have been aimed at mid-sized firms, along with larger enterprises with departmental or distributed environments. Future designs "will target a range of large-scale enterprise use cases such as virtual infrastructure, virtual desktop infrastructure, databases, and other mission-critical deployments that use the entire family of products, including the Nimble CS700 [Fibre Channel] array."
- Shares remain down 46% from where they traded before Nimble missed FQ3 estimates and issued soft guidance on Nov. 19.
Nov. 24, 2015, 8:28 PM
- Favorable trends in cloud traffic are a boon for data-center companies, says SunTrust Robinson Humphrey in a positive launch on the sector.
- Analyst Inder Singh singled out CyrusOne (NASDAQ:CONE), DuPont Fabros (NYSE:DFT) and Equinix (NASDAQ:EQIX) as picks in the space, which should benefit from growing bandwidth-intensive applications, particularly streaming video. Traffic is expected to grow at a compound annual growth rate of 23% through 2019.
- "Given that two-thirds of internet traffic is data center related, the importance of data centers both from a colocation and cloud perspective is significant," says Singh. "Data center traffic is the biggest component of Internet traffic, almost twice as much as the traffic that transverses IP WAN networks."
- Mergers and acquisitions could continue, too, as companies look to become "one-stop shops" for clients and pursue scale.
- The firm launched CONE, DFT, EQIX and Zayo Group (NYSE:ZAYO) at Buy, along with a Buy rating for Cisco Systems (NASDAQ:CSCO), as well as a Neutral rating for Internap (NASDAQ:INAP).
- Price targets: $43 for CONE (22% upside from today's $35.25); $40 for DFT (22% upside from today's $32.90); $345 for Equinix (18% upside form today's $293.21); $32 for Cisco (17% upside from today's $27.27); $7.50 for Internap (7.5% upside from today's $6.98); $34 for Zayo (41% upside from today's $24.02).
Cisco Systems Inc is engaged in designing, manufacturing and selling of Internet Protocol (IP) based networking products and services related to the communications and information technology (IT) industry.
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