jstratt

Breaking Down Cisco's Earnings Beat

I am concerned about CSCO because things dont add up for me. I am not an expert but here is what bothers me.

1) Internet usage is growing at a huge rate with streaming video and the entire convergence of video and broadband. Further that is a trend that looks to continue for a decade. CSCO should be blowing away previous years revenue numbers.

2) I was surprised a few years ago when they bought Scientific Atlanta a maker of cable boxes. It seemed like a low margin business that was not a long term fit. I still feel that way.

3) The recent press reports about promoting endless meetings is another huge concern. Sounds to me like they cant determine their priorities.

The meetings remind me of another company who hired premier consultants who tried to radically alter a very profitable company though endless meetings and participative exercises. The only amazing thing was how quickly they moved to the brink of extinction.

Conclusions
CSCO probably needs a new CEO even though Chambers has been a great leader and founder.

Build up proprietary assets such as software and systems related to their core business

Rev down 17% in an exploding field sounds like big trouble

CSCO needs to

The 15 Most Cash Rich Companies

I like CSCO and IBM best out of the list above. Both have growing businesses that compliment their excellent cash position.

Thanks for a great post!