woodstove Posted April 15, 2013 Share Posted April 15, 2013 I'm with Mikazo's take on Cisco. Very long tail. And there is tremendous assembled brainpower, organized into profitable firm. That is good long-term bet is most likely scenario. Disclosure: small position in Cisco, happy with it, not adding more recently. Link to comment Share on other sites More sharing options...
Guest valueInv Posted April 15, 2013 Share Posted April 15, 2013 I'll admit that I didn't have as good an understanding of SDN as I do now after reading the link you sent. That is your biggest reason to be worried. Then I did some searching for Cisco's stance on SDN and found this article: http://www.theregister.co.uk/2013/04/11/sofware_defined_networking_feature/ (Scroll to where it says Cisco). Cisco has to posture publicly. They will join SDN standards bodies to: 1, Hedge their bets 2, Derail SDN efforts 3, Slow down SDN momentum 4, Co-opt SDN There is no guarantee that they will succeed in any of these. There are other big players and more momentum than I have seen in the networking industry for a decade. While I think SDN could be a threat to Cisco, I don't believe it will ever completely replace traditional networking. If SDN takes off, it would be similar to the smartphone/tablet invasion of the PC/laptop market. Huge chunks of market share could be lost to the newcomer, but it would never be a complete takeover. Plus, given the rate of adoption of new technologies in the networking industry (think IPv6, DNSSEC, etc.), I'm not too worried at all for the near future. Plus, if Cisco participates in the development of SDN standards as well as offering complimentary hardware for that purpose, they have as good a chance as anyone else in succeeding. What's to stop Cisco from offering traditional specialty hardware as well as lower-priced commodity hardware that is compatible with SDN standards and at the same time have value-added features from Cisco? Take a look at Dell to see what even a partial switchover can do. A 20% destruction of demand can have a terrible impact on margins, profitability and stock price. SDN may be a longer term threat - in the short term they have a bigger threat in the form of Huawei and other Chinese vendors. Link to comment Share on other sites More sharing options...
Palantir Posted April 15, 2013 Share Posted April 15, 2013 Yeah I agree with ValueInv. This seems to be just like specialized servers being replaced by commoditized virtual servers - basic mental model is specialized hardware is constantly replaced by commodity hardware where the main value add is the software... Link to comment Share on other sites More sharing options...
Guest valueInv Posted April 15, 2013 Share Posted April 15, 2013 Yeah I agree with ValueInv. This seems to be just like specialized servers being replaced by commoditized virtual servers - basic mental model is specialized hardware is constantly replaced by commodity hardware where the main value add is the software... I would add to that. Hardware is being replaced by software that may not be that specialized. That makes a big difference to Cisco's core competency. Link to comment Share on other sites More sharing options...
Palantir Posted April 15, 2013 Share Posted April 15, 2013 ^ On that note who benefits from SDN? Link to comment Share on other sites More sharing options...
writser Posted April 15, 2013 Share Posted April 15, 2013 In my humble opinion the SDN discussion is mostly irrelevant. FWIW I graduated in Computer Science a couple of years ago and I work with low latency networks on a daily basis. I have no clue how SDN will affect me, the industry or Cisco. SDN might or might not be a disruptive technology. Cisco might or might not be able to take advantage of it. SDN might be common practice in 1 year or in 10 years. Cisco might or might not invent a quantom computing router in the future. What do we know .. What I see is a stock with a EV/EBITDA of roughly 6, a nice FCF yield and a rock-solid balance sheet. ROA has been ~10% over the past 10 years and ROI ~18%. Sharecount has decreased from 7.2 to 5.4 mio shares. Book value has doubled, earnings have tripled. Their history of capital allocation is not extremely good but they've been doing better the past few years. Their margins suggest they have some sort of a moat. All this in a challenging industry. If I take this data and calculate a rough intrinsic value for Cisco the share-price looks on the low side. So I have a small position. I feel like you guys are speculating about a new technologies and ignoring the very facts that are right in front of you. I also think this is one of the reasons Cisco is cheap in the first place. Though to be fair the truth is probably in the middle. Link to comment Share on other sites More sharing options...
mikazo Posted April 15, 2013 Share Posted April 15, 2013 In my humble opinion the SDN discussion is mostly irrelevant. FWIW I graduated in Computer Science a couple of years ago and I work with low latency networks on a daily basis. I have no clue how SDN will affect me, the industry or Cisco. SDN might or might not be a disruptive technology. Cisco might or might not be able to take advantage of it. SDN might be common practice in 1 year or in 10 years. Cisco might or might not invent a quantom computing router in the future. What do we know .. What I see is a stock with a EV/EBITDA of roughly 6, a nice FCF yield and a rock-solid balance sheet. ROA has been ~10% over the past 10 years and ROI ~18%. Sharecount has decreased from 7.2 to 5.4 mio shares. Book value has doubled, earnings have tripled. Their history of capital allocation is not extremely good but they've been doing better the past few years. Their margins suggest they have some sort of a moat. All this in a challenging industry. If I take this data and calculate a rough intrinsic value for Cisco the share-price looks on the low side. So I have a small position. I feel like you guys are speculating about a new technologies and ignoring the very facts that are right in front of you. I also think this is one of the reasons Cisco is cheap in the first place. Though to be fair the truth is probably in the middle. +1 Link to comment Share on other sites More sharing options...
Guest valueInv Posted April 17, 2013 Share Posted April 17, 2013 Enter Intel: http://venturebeat.com/2013/04/17/intel-aims-to-disrupt-proprietary-networks-with-software-defined-networking/ Link to comment Share on other sites More sharing options...
mikazo Posted May 16, 2013 Share Posted May 16, 2013 Here's a good article on Google's use of software-defined networking: http://www.networkcomputing.com/data-networking-management/inside-googles-software-defined-network/240154879 Also, CSCO beat earnings and is up 11% in pre-market trading today. :D Link to comment Share on other sites More sharing options...
writser Posted May 16, 2013 Share Posted May 16, 2013 Nice. Good things happen when cheap companies have better earnings than expected. Link to comment Share on other sites More sharing options...
Eric50 Posted May 16, 2013 Share Posted May 16, 2013 Nice. Good things happen when cheap companies have better earnings than expected. Hummmm... Revenue is up 5% year over year while receivables increased by 25%... Q4 guidance is lower... What I see is a market drunk from money printing that celebrates any crappy results.... 1999 again? Link to comment Share on other sites More sharing options...
smathew Posted May 16, 2013 Share Posted May 16, 2013 Nice. Good things happen when cheap companies have better earnings than expected. Hummmm... Revenue is up 5% year over year while receivables increased by 25%... Q4 guidance is lower... What I see is a market drunk from money printing that celebrates any crappy results.... 1999 again? More than that, out of that 5% revenue growth (ie around 600 revenue million growth from 11.6 Billion USD) 2.5 % (around 300 million )came from NDS acquisition and another 2.5 % came from low margin server business (UCS). They have paid 5 billion USD for NDS acquisition . So they managed to get 2.5% revenue growth and profit growth with 5 Billion spending . Link to comment Share on other sites More sharing options...
Palantir Posted May 17, 2013 Share Posted May 17, 2013 Also, CSCO beat earnings and is up 11% in pre-market trading today. :D *cough*confirmation*cough*bias 8) Link to comment Share on other sites More sharing options...
wachtwoord Posted May 17, 2013 Share Posted May 17, 2013 I've been holding this since $16. Time for a re-evaluation I think :) Link to comment Share on other sites More sharing options...
Guest valueInv Posted June 6, 2013 Share Posted June 6, 2013 Then I did some searching for Cisco's stance on SDN and found this article: http://www.theregister.co.uk/2013/04/11/sofware_defined_networking_feature/ (Scroll to where it says Cisco). Cisco has to posture publicly. They will join SDN standards bodies to: 1, Hedge their bets 2, Derail SDN efforts 3, Slow down SDN momentum 4, Co-opt SDN There is no guarantee that they will succeed in any of these. There are other big players and more momentum than I have seen in the networking industry for a decade. Well, well, well, color me surprised ::): http://gigaom.com/2013/06/06/big-switch-turns-bearish-on-opendaylight-project-as-sdn-standards-advance/ Link to comment Share on other sites More sharing options...
stahleyp Posted July 6, 2013 Share Posted July 6, 2013 A Startup Founded By Some Of Cisco's Most Prestigious Former Engineers Wants To Knock Cisco's Lights Out http://finance.yahoo.com/news/startup-founded-ciscos-most-prestigious-120000157.html Link to comment Share on other sites More sharing options...
Guest valueInv Posted August 14, 2013 Share Posted August 14, 2013 I'll admit that I didn't have as good an understanding of SDN as I do now after reading the link you sent. That is your biggest reason to be worried. Then I did some searching for Cisco's stance on SDN and found this article: http://www.theregister.co.uk/2013/04/11/sofware_defined_networking_feature/ (Scroll to where it says Cisco). Cisco has to posture publicly. They will join SDN standards bodies to: 1, Hedge their bets 2, Derail SDN efforts 3, Slow down SDN momentum 4, Co-opt SDN There is no guarantee that they will succeed in any of these. There are other big players and more momentum than I have seen in the networking industry for a decade. While I think SDN could be a threat to Cisco, I don't believe it will ever completely replace traditional networking. If SDN takes off, it would be similar to the smartphone/tablet invasion of the PC/laptop market. Huge chunks of market share could be lost to the newcomer, but it would never be a complete takeover. Plus, given the rate of adoption of new technologies in the networking industry (think IPv6, DNSSEC, etc.), I'm not too worried at all for the near future. Plus, if Cisco participates in the development of SDN standards as well as offering complimentary hardware for that purpose, they have as good a chance as anyone else in succeeding. What's to stop Cisco from offering traditional specialty hardware as well as lower-priced commodity hardware that is compatible with SDN standards and at the same time have value-added features from Cisco? Take a look at Dell to see what even a partial switchover can do. A 20% destruction of demand can have a terrible impact on margins, profitability and stock price. SDN may be a longer term threat - in the short term they have a bigger threat in the form of Huawei and other Chinese vendors. Sure enough: http://venturebeat.com/2013/08/14/cisco-stock-drops-10-after-it-says-its-laying-off-4000-employees/ Glad I sold my stock. Link to comment Share on other sites More sharing options...
Guest valueInv Posted November 8, 2013 Share Posted November 8, 2013 I'll admit that I didn't have as good an understanding of SDN as I do now after reading the link you sent. That is your biggest reason to be worried. Then I did some searching for Cisco's stance on SDN and found this article: http://www.theregister.co.uk/2013/04/11/sofware_defined_networking_feature/ (Scroll to where it says Cisco). Cisco has to posture publicly. They will join SDN standards bodies to: 1, Hedge their bets 2, Derail SDN efforts 3, Slow down SDN momentum 4, Co-opt SDN There is no guarantee that they will succeed in any of these. There are other big players and more momentum than I have seen in the networking industry for a decade. While I think SDN could be a threat to Cisco, I don't believe it will ever completely replace traditional networking. If SDN takes off, it would be similar to the smartphone/tablet invasion of the PC/laptop market. Huge chunks of market share could be lost to the newcomer, but it would never be a complete takeover. Plus, given the rate of adoption of new technologies in the networking industry (think IPv6, DNSSEC, etc.), I'm not too worried at all for the near future. Plus, if Cisco participates in the development of SDN standards as well as offering complimentary hardware for that purpose, they have as good a chance as anyone else in succeeding. What's to stop Cisco from offering traditional specialty hardware as well as lower-priced commodity hardware that is compatible with SDN standards and at the same time have value-added features from Cisco? Take a look at Dell to see what even a partial switchover can do. A 20% destruction of demand can have a terrible impact on margins, profitability and stock price. SDN may be a longer term threat - in the short term they have a bigger threat in the form of Huawei and other Chinese vendors. And sure enough: http://www.lightreading.com/carrier-sdn/sdn-architectures/cisco-asks-the-killer-sdn-question/a/d-id/706490? Link to comment Share on other sites More sharing options...
Palantir Posted November 8, 2013 Share Posted November 8, 2013 ^RHT needs to attack this space. Seems like a good fit with its "mission critical" business model. Link to comment Share on other sites More sharing options...
Guest valueInv Posted November 8, 2013 Share Posted November 8, 2013 ^RHT needs to attack this space. Seems like a good fit with its "mission critical" business model. Too much specialized knowledge required. Link to comment Share on other sites More sharing options...
mikazo Posted November 14, 2013 Share Posted November 14, 2013 CSCO down ~12% today after earnings release. Cisco Systems Inc. is taking a beating on Q1 miss, weak Q2 guidance http://business.financialpost.com/2013/11/14/cisco-is-taking-a-beating-on-q1-miss-and-weak-q2-guide/?__lsa=aca3-e947 Link to comment Share on other sites More sharing options...
Palantir Posted November 14, 2013 Share Posted November 14, 2013 I wonder if Cisco can sell SND products for very low cost and make money on the service agreements...They have a decent amount of revenue from recurring services... Link to comment Share on other sites More sharing options...
Guest valueInv Posted November 14, 2013 Share Posted November 14, 2013 CSCO down ~12% today after earnings release. Cisco Systems Inc. is taking a beating on Q1 miss, weak Q2 guidance http://business.financialpost.com/2013/11/14/cisco-is-taking-a-beating-on-q1-miss-and-weak-q2-guide/?__lsa=aca3-e947 Surprise, surprise. Link to comment Share on other sites More sharing options...
Guest valueInv Posted November 14, 2013 Share Posted November 14, 2013 I wonder if Cisco can sell SND products for very low cost and make money on the service agreements...They have a decent amount of revenue from recurring services... You'd be looking at a much smaller company that what it is today. Link to comment Share on other sites More sharing options...
Palantir Posted November 14, 2013 Share Posted November 14, 2013 I wonder if Cisco can sell SND products for very low cost and make money on the service agreements...They have a decent amount of revenue from recurring services... You'd be looking at a much smaller company that what it is today. Certainly, but I don't really see any other option. Link to comment Share on other sites More sharing options...
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