Cisco (CSCO) $48.50
I’m holding for now, let’s see progress on the new “Platformization” initiatives.
The stock was flat for the last 5 years, but did return about 7% per year for the last 10 – no surprise. The past year its down 9%.
As the older lumbering incumbent in networking, it was relegated to a commodity cyclical, more product sales instead of the bigger projects that Arista stole from under their nose with Microsoft and Meta, building out their platforms as a partner not as switch and routers or other networking gear seller.
It will continue to grow in the low to mid-single digits for revenues and sales and the valuation too reflects that, so it’s not that underpriced to buy, and the job cuts mean they do want to increase the bottom line – but that’s not a growth story, then.
This is a step in the right direction, basically getting to where Arista is now.
“Management was clearly trying to message that the demand environment is returning to normal; Cisco will continue to shift investments towards AI, Cloud and Security that is resulting in a re-allocation of resources; the company is collapsing its product structure under Jeetu Patel as ‘platformization’ across categories is happening; and AI and datacenter modernizations are occurring,” said Piper Sandler analysts James Fish and Quinton Gabrielli, in an investor note.
But, too little, too late?
It’s going to be a show me story – there is enough growth in AI and datacenter, but everyone has or had their sights on it for a while now.