Cisco (CSCO) is on the turnaround trail in 2014. It is seeing revenue growth in different departments that can result in stock price appreciation in the future. The same can be said regarding Intel (INTC), which is also on a solid run of late. Let us take a close look at the performance of the two companies and see how they are positioned for the long run.
Cisco's revenue from the Data Center increased 29%. UCS continues to remain a leading platform for hybrid cloud environments, big data, and virtual desktop services gaining market share for the 17th consecutive quarter since it was introduced. Security revenue increased 10% and orders increased 20%, as a source for its integration continued to fuel growth and opportunities with customers. There are several businesses that are starting to show improving trends.
Collaboration orders increased 4%, reversing a multi-quarter negative trend while collaboration revenues decreased 12% in the quarter. The decline in Unified Communications and TelePresence was balanced by the positive revenue growth of software-as-a-service WebEx business. This quarter Cisco began unveiling its next-generation of collaboration solutions, specifically a new range of innovation cloud connected TelePresence products at very competitive price points.
Wireless revenues increased 3% with orders up 12%. There’s good strength in 802.11ac ramp, with the AP 3700 being the fastest ramping access point in its history. The emerging markets; from a macroeconomic perspective, continue to be challenging with Brazil down 27% and Russia down 28%, while China declined 8%, Mexico declined 3%, and India declined 1%.
Its strategy with emerging markets is unchanged. Its relationship begins with the engagement with the leadership of the countries on key priorities for the country and technology development initiatives and drives all the way to local municipalities, their service providers and private businesses.
Cisco’s service provider orders decreased 5%, depicting improvements from the minus 12% decline in the second quarter and 13% decline in the first quarter. The weakness in emerging markets also negatively impacts the service provider customer segment. SP Video revenue declined 26%, which had a negative impact on its SP segment numbers as it continues to manage through the transition of that business. SP Video orders declined 11%. There are some signs of stabilization in the SP business but is believed to take multiple quarters to return to growth. It continues to lead in the service provider market.
Intel has made significant progress with its Data Center Segment (DCG) with revenue up by 11% along with cloud computing, networking, and storage all grew approximately 20% for the full year. Intel had all-time record NAND revenue driven by the DCG particularly in Cloud. Intel’s McAfee also reported record first-quarter bookings along with an 8% increase in consumer bookings.
In addition, Intel has launched its Ivy Bridge MP server CPU family known as Xeon E7 that features largest memory footprint in the industry. The company has experienced tremendous response in this regard from its enterprise customers in the last reported quarter as it provides high speed and enhances real-time data analytic capabilities.
In addition, Intel has recently announced an important strategic Tie-Up with Cloudera, including investment that is specifically designed to enhance Hadoop innovation and penetration, mainly on IA. This is Intel's single largest data center technology investment in its history. The deal will join Cloudera’s leading enterprise analytic data management software powered by Apache Hadoop. This move will certainly enhance Data Center revenue in the fiscal 2014 and increase its market share in the segment.
Intel is determined and continuously working towards expanding Intel technology into the fast-growing world of interconnected devices in Internet of Things concept. The company has also acquired BASIS. Hence the acquisition of BASIS will indeed assist the company in providing access to new world-class technology and a team of proven innovators. The Internet of Things had a growth of 30% in the first-quarter 2014 and Intel is continuously driving significant innovation in this concept and further plans to invest to extend its architecture into the very low power space and acquire IP and capabilities.
Intel currently trades at trailing P/E of 14.16 and forward P/E of 13.45. Analysts have forecasted CAGR of 5.00% for the next five years. So, Intel looks like a good buy as earnings are expected to improve.
Both stocks are looking like good long-term prospects. They also have good fundamentals. So, investors should definitely think of buying these two companies for the long run.