Company Review Thursday

Company Review Thursday: Cisco Systems

With this being the first time I’m doing a review, I’ll go over one of the very first stocks I purchased back in January 2012, Cisco Systems, Inc. Working in technology and having a dad that worked in technology my whole life, the technology sector of the market was the very first place I looked for investment opportunities.

Company Snapshot (Yahoo! Finance Data)
Name: Cisco Systems, Inc. (as of close of business 11/18/2015)
Ticker: CSCO
Current Price: $27.12
52 Week High Price: $30.31
52 Week Low Price: $23.03
Market Capitalization: 139.96 B (Large Cap)
Price/Earnings (P/E Ratio): 14.43
Earnings/Share (EPS): 1.88
Dividend: $0.84/share/year
Industry: Technology
Primary Business: Network and Communications Equipment and Software

The Good
– Cisco has a wonderful dividend yield at 3.14%. When you’re looking for stocks that will help generate income for you to reinvest passively, you’re looking for dividend paying stocks and Cisco would definitely be a good one.
– Cisco just announced a partnership with Ericsson to provide to customers a larger portfolio of services and products as well as pursuing increase use for the Internet of Things capabilities. If you haven’t heard about the Internet of Things, think of how a Fitbit communicates through Bluetooth on your phone. Or how you can connect your iPhone 6S Plus to practically every other Apple device you own. Basically you can have the convenience of many of your tools and appliances play well with each other and communicate with each other to make your life easier…This can be creepy or very exciting news for you. As an investor, I’m hoping that the predicted $1 billion in revenues generated in 2018 actually comes to fruition.
You can find the press release for this partnership here

The Bad
– Over the last 3 years of me holding this company, the price hasn’t really gone too much further out of the 52 week range. Seems like growth is stagnant. They are able to keep their customers happy, but generating new revenue each year seems to have alluded Cisco the last couple years. In 2013, they reported $48.6 billion, in 2014 they reported $47.1 billion and this year they reported $49.2 billion (as reported by schwab.com). That is only a 1.23% growth from 2013 to 2015. As an investor, I want more here.

The Ugly
-Under the management of Chuck Robbins, Cisco is making a big push to create partnerships (with Apple and Ericsson to name a couple) and acquisitions quickly in search of ways to revolutionize the company. Although for the long term these partnerships look promising, in the short term that looks like a lot of cash going out the door and into other pockets not my own as a shareholder. Am I willing to take these short term lows for long term highs?

And the answer is yes. That type of risk is okay for me right now.

Hope you have a great weekend!! Feel free to leave comments and questions for me if you have any!!

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