Cisco (NASDAQ:CSCO) has been in trouble in recent times. Its business has been falling apart due to low demand in the emerging markets and the advent of competitors such as Juniper and Alcatel. But Cisco hasn't given up and it could turn around its business going forward. Let's take a look at the different strategies of Cisco.
The Way Forward
Cisco has rigorously developed technologies such as Cisco catalyst smart operations to match with the major market transitions so as to deliver advanced and innovative solutions to its customers across the world that could accelerate its business growth. This operational transformation not only will reduce deployment, troubleshooting, operating and management costs through various tools, capabilities and available management applications but also enhance end-user experience.
Additionally, Smart Install will provide efficient IP connectivity, capabilities and scalability, zero-touch deployment, replacement, automatic configuration backups and Auto smartports, which will automatically recognize end devices and its quality of service (QoS).
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- CSCO 15-Year Financial Data
- The intrinsic value of CSCO
- Peter Lynch Chart of CSCO
The Internet of Everything
Cisco has recently initiated more holistic long-term Internet of everything strategy that connects people, processes, data and things thus creating smart work place, smart grid, citywide optical fiber to home and public TelePresence capabilities at Amsterdam, Netherlands, thus envisioning a better, smarter and easier future. Cisco has a definite plan to bring it to the other emerging IT regions in the world as it considers it a next wave of the Internet of everything, which is expected to outshine every technology transition people are experiencing in the market place.
Besides, the company is also engaged in building a strong platform for the Internet of everything with degree of extent and security to address the unequaled difficult requirements of the customer or businesses. This move will certainly enhance end-customer experiences and will deliver value-oriented solutions with respect to their requirements.
Another strategic move is being taken with respect to U.S. enterprise and U.S. commercial. The company has substantially improvised its SDN and offered white label solutions and public cloud solutions with cost-saving initiatives such as reducing cost in its capex and opex, and reduced expenses in its security measurement scales. Cisco thus expects better yields from these segments in the current quarter and for fiscal 2014.
Another good thing for investors who are looking for a value growth in stock is that its data center segment grew by double digits with surging demand for its newly released UCS and NEXUS Portfolio. In addition, Cisco’s cloud service business also notices strong momentum in its sales for its Meraki web ask and security cloud businesses. Cisco has also diversified its cloud service segment with additional offerings such as InterCloud that provides high security hybrid cloud environment across multiple public and private clouds. Therefore, the company expects the momentum to carry on for the current fiscal 2014 with considerable share gain in the segment.
Cisco is also focusing regularly on several value creating initiatives such as improved cost structure and capital allocation strategy that result in improved results and innovation that matter the most in a highly competitive environment. The company believes that these will certainly create value for shareholders, customers and stakeholders eventually.
Cisco undoubtedly faces tough competition from its peer Juniper Networks as the latter is known for innovation in network solutions. While Cisco’s revenue and net income went down in the second-quarter of fiscal 2014, Juniper Networks gained approximately 12% in its revenue in the fourth quarter and its net income increased to 30% as compared to the same quarter last year.
However, both these companies faced problems with respect to routers, switches and firewall.
Of late, Cisco has admitted that its year-on-year sales for routers and switches went down by 11% with orders down 5%, while its rival Juniper Networks' sales increased by 5% in the same category in the last reported quarter. Except Juniper Networks, most of the companies such as Verizon, AT&T, Alcatel-Lucent and Huawei witnessed a decrease in SDN activities that comprises of IP network, routers and switches. These companies, however, blame weak public sector spending, particularly by the U.S. Federal government, along with softness in financial services.
Cisco is comparatively cheaper than its rival Juniper Networks. The company is trying to turn around and it is making a lot of moves. Considering its valuation and the different moves that it is making, Cisco could be a good buy.