It seems like investors really punished the stock despite a solid earnings report for the current quarter.
If John Chambers is right about Cisco's growth prospect in the next few quarters, the current valuation is too rich. Investor won't pay a P/E of 15 for a company with zero growth in its main business.
RE : Cisco Foretells Challenges to Global Market
yalanand
5/10/2012 7:28:26 AM
Not a bad set of numbers from CISCO. Earlier Cisco took some bold decisions like selling its Flip business which now seems to be helping CISCO to bring down its cost.
Re: Over reaction?
yalanand
5/10/2012 7:33:33 AM
It seems like investors really punished the stock despite a solid earnings report for the current quarter.
@Noreen, I think investors are bearish about IT sector after the Cognizants bad results. I read somewhere that for the first time since the Lehman Brothers crisis, the Cognizant has lowered its forecast for the full year, largely on account of financial services clients in North America.
Re: Over reaction?
Dex
5/10/2012 8:01:50 AM
I still see Cisco as undervalued. For my money, I'm betting on good future prospects, largely from the diversity of its services.
Re: Over reaction?
cat tail
5/10/2012 8:17:16 AM
Cisco has had its issues, but it has also shown a nice resiliency and ability to adapt. That should serve it well in the long term.
Re: Over reaction?
tokyogai
5/10/2012 9:33:55 AM
I agree. Their performance was solid. I see the guidance more as being conservative than being pessimistic. Time to consider a buy.
Re: Over reaction?
ProfR
5/10/2012 9:51:26 AM
I agree that Cisco has shown resiliency and an ability to adapt. An example is that they bought Tandberg and are now seeing growth in the video sector. We might see some more acquisitions ahead to bolster growth.
@yalanand
At a forward P/E of 9, I think you can definitely qualify it as a value stock. However Chambers expressed concern about the global economy which the market is paying attention to. Might have a wait a few months while this settles out -- the bottom line is that Cisco is going to move the way the macro economy moves in the next several months and a lot of that has to do with how the European debt crisis is managed.
@ProfR,
Do you see evidence that Cisco is doing well with Tandberg? That is certainly not the common perception, you often hear that they overpaid.
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