Cisco Systems Inc. (CSCO) is the leading company in producing and selling Internet protocol based networking and other products related to IT industry. The company is also known for providing a line of products for transporting data, voice, and video within buildings, across campuses, and around the world. The company has witnessed significant growth in the recent past. The growth of the company has been influenced by the growth in the number of Internet users in homes and businesses. Currently, Cisco holds a significant share in the markets in which it operates. Some of the major segments of the company include, United States and Canada, European markets, emerging markets, Asia Pacific, and Japan.
Growth in Cisco's Operations
Cisco has been enhancing its international operations continuously by acquiring relevant companies all around the globe. The company has made some major acquisitions in the past including the acquisition of NDS Group Ltd. in July 2012, acquisition of Versly in August 2011, acquisition of BNI Video in November 2011, the acquisition of Lightwire Inc. in March 2012, and the acquisition of ClearAccess in May 2012.
Apart from all these acquisitions, Cisco announced its plans to acquire a cloud-networking company Meraki Inc. for around $1.2 billion. The consideration would be settled through cash and retention-based incentives. This acquisition is expected to improve the implementation of Cisco's strategy to provide software solutions that make network management easy for the customers. One of the objectives of the company is to maximize the revenue and this acquisition is expected to assist it in reaching that goal also.
Cisco, the world's largest manufacturer of networking equipment, intends to provide innovative products that make the network infrastructure easy to manage and easy to integrate. Large enterprises face the issue of integrating the networking equipment, and by providing the relevant solutions, Cisco will be able to hold competitive advantage in the market.
All these acquisitions have significantly expanded the scope of operations of the company and they have enhanced its potential to generate even higher revenues and profits. Cisco's profit increased by 18% to $2.1 billion in the its first fiscal quarter ended October. This surge in profit was partly supported by the firm's acquisitions. With the recent acquisitions, it can be expected that Cisco's profit will continue to rise in the prospective periods. Although the company has undergone a wide scope expansion recently, it is anticipated that Cisco's growth does not stop here. The company aims to increase its operations continuously. From the acquisitions done by the firm, it can be inferred that the growth is not confined to a single segment, but it is diversified throughout the portfolio of its operations.
The major driver of the growth of the company is the increasing demand for networking products. Although the Internet is accessible to a large number of users, the use of networking products is still growing. One of the reasons behind this continuous expansion in demand is the extended use of networking products in enterprises and campuses.
Cisco's Market Performance
Cisco's market performance has been fairly stable in the recent past. The announcement of the acquisition has influenced the market performance of the company in a positive manner and the share price of the company is exhibiting an upward trend. The shares of the company are currently being traded within the range of $18.84 and $19. The 52-week range of the share price has been $14.96 and $21.30. It can be said that the current market value of Cisco's shares is more inclined toward the highest point reached by the shares in the past 52 weeks.Cisco currently holds a market capital amounting to $100.85 billion. The EPS of the company is 1.55 and it can be inferred from this data that the firm is highly profitable. The major competitors of the company include Ericsson (ERIC) and Alcatel-Lucent (ALU). Both of these companies directly compete with Cisco as they are engaged in the production and selling of communications infrastructure. Ericsson competes with Cisco in the communications infrastructure market, while Alcatel competes with Cisco in a much wider market as both the companies provide similar products.
After the analysis of the operational expansion and market performance of Cisco Systems, in my opinion, investors should buy the shares of the company as its profitability is expected to grow even further in the prospective periods. The company has made some major acquisitions in the recent past which have given it a competitive advantage over other entities operating in the industry. The planned acquisition of Meraki will boost the company's operations even further and Cisco's revenue and net income will grow.