Cisco Systems, Inc. (NASDAQ:CSCO)

CAPS Rating: 4 out of 5

Cisco Systems creates Internet Protocol-based routers and switches that move data, voice, and video packets across networks.

Recs

7
Player Avatar ggunnr1 (< 20) Submitted: 6/15/2011 3:13:52 PM : Outperform Start Price: $14.67 CSCO Score: +29.81

Who knows where the bottom is, but with CSCO at these prices I think it's an absolute steal. Sure their is a lot of pressure in the switching segment, pressure from decrease in government spending, pressure from DEAD MONEY headlines playing on investor emotions, pressure from CHAMBERS MUST GO OR I'M OUT OF HERE pleadings. But hey, let's get some news about the blade server success! If management stays true to its word about de-bureaucracizing the company and focusing on the core business, we'll start seeing a dramatic rebound in PPS to the low-mid 20 level in the next year or so. I believe in the company for the long-haul and am expecting the size of the dividend to increase and the size of the float to decrease forever and ever.

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Member Avatar kpoeppel (< 20) Submitted: 7/12/2011 10:54:14 AM
Recs: 0

Agree. Be greedy when others are fearful! Rec.

Member Avatar davidm8797 (41.01) Submitted: 7/18/2011 5:06:56 PM
Recs: 0

Oh, but for the fact that people are already calling CISCO a buy... should be an indicator that the company is still a sell... if you're going to call it a bloated beauracracy, it is. Cisco is a government contractor by trade, and as a result, is stuffed to the brim with token positions in order to keep its government masters happy (read: ex-gov employee positions...). But the real bloat is in the company's market cap. It's $80B. 80% of revenue comes from stuff like you said - servers, switching etc. All of which is government driven. Even the slightest cut in defense/infrastructure spending is going to go straight to their bottom line. If Cisco drops to where Sprint is (@ $15B Market Cap), then I'll call it a buy. Until then, it still needs to fall sufficiently farther. Short term buy, yeah, maybe. Long term, not a chance....

Member Avatar ggunnr1 (< 20) Submitted: 7/23/2011 10:46:58 AM
Recs: 0

Well, about a month ago when I wrote that there wasn't very much positive press. But I'm not going to sell it/change my mind just because media/investor sentiment is starting to turn the corner...the reason I bought it was because it was trading at an extremely reasonable price...80B for 9.25B in annual FCF. CSCO is definitely dependent on government spending...can anyone help me out with the exact %? However, a reduction in government spending isn't changing the fact that data traveling through the internet is growing at outrageous percentages throughout the WORLD...which puts CSCO, the market leader, the business with the most R&D and capital available to invest in this technology segment, to take advantage of the unstoppable trend.

I'm not really sure where you are getting a comparison between CSCO and Sprint and the 15B market cap...but anyway, do you honestly believe that CSCO can trade at 50% of cash value...assigning zero value to the business? It seems like you are throwing numbers around that aren't realistic.

Please check out the link and look at the financial statements: http://finance.yahoo.com/q/cf?s=CSCO+Cash+Flow&annual

Member Avatar PuddinHead42 (28.78) Submitted: 8/4/2011 1:12:03 PM
Recs: 0

As a value play, Cisco is ok. Growth may be dead. $5/share in cash, so if you look at earnings compared to stock price ex-cash, you compare to $11. I think they expect $1.60 earning per share next year. Low PE. Still throwing off lots of cash. Sounds like a great value, but so has Microsoft for years.

Member Avatar davidm8797 (41.01) Submitted: 9/4/2011 7:24:16 PM
Recs: 0

I compared CSCO to Sprint for the simple fact that they are both tech, and that Sprint, just 4 years ago, was worth $67B. It's now worth $10B. The lesson is, no matter how big a company is, if it's not rewarding its shareholders, there is absolutely no reason to own it. CSCO is worth $80B. Even if market share expands exponentially, without capital growth, the share becomes worthless. Anything short of monstrous growth in the company means that it's pointless to own. Dividends? No thanks. If I invested in dividend stocks, which I don't I'd look for 4-7% dividend return, just in order to cover potential capital loss. However, I don't buy into that dividend propoganda, because frankly, most companies hate their common shareholders (which is absolutely suicidal), and dividends will be the first thing to get cut when revenues start shrinking with the economy.

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