Cisco Systems Inc. (Also known as Cisco) are an American multinational technology conglomerate with head offices in San Jose, California, and Silicon Valley. Cisco manufacture, develop, and sell networking hardware, telecommunications equipment, and other high technology services and products.
With reports of numerous layoffs at the networking giant, investors were angered when the corporation announced its fiscal fourth-quarter results. Taking this into consideration, there are still a good deal of reasons to purchase the stock. Dominance in its core switching and routing markets, growth opportunities in security and collaboration, a shift to software, a bargain valuation, and an enticing dividend make Cisco a worthwhile investment.
Safety First- A primary concern of many buyers, before they’ve even considered what fancy things their tech can do, is whether or not it will be safe. Though not a great pick for anyone wanting the electrifying development that you’ll find with newer tech companies- Cisco has time and time again proven itself to be a much safer bet. (Where we ignore fierce financial swings) Cisco has developed revenues 10 out of the last 13 years. You’ll find a reliable increase in earnings and this, paired with the corporations steady contribution of products and strict capital return policies for shareholders, make Cisco an extremely safe theoretical horse to bet.
A hearty dividend- In the past few years, Cisco has transformed itself into one of the best surplus stocks in the technology sector- all this, despite having only started paying dividend from 2011. The stocks revenue remains at 3.4% at present, following a 24% surplus hike earlier this year, outdoing huge names, from Microsoft to Intel. Just under 40% of Cisco’s free cash flow was eaten up by dividends during last years fiscal, which left the corporation with space to develop the dividend at a quicker rate than actual earnings for years to come.
Cash Flow- Cisco’s knack for creating lots of moola has made it a go-to for many investors, and the latest figures fit this trend. They now boast $26 million in cash and short-term investments, which gives cisco a lot of room acquisitions- no easy feat in today’s economic climate. Cisco’s strong cash flow makes them dominant in buyout negotiations, and allows them to sit comfortably whilst they bide their time until possible acquisitions like EMC fit the price range they wish.
Change is Good- Cisco are firm believers that in the IT space , market transition is occurring at a phenomenal rate, and sees that three areas in particular are an imperative part of this transition: Digitisation/Internet of Everything, Visualisation/Application Centricity, and The Cloud. A number of reports suggest that amid the public cloud services, cloud infrastructure is the quickest developing. Where Internet of Things is concerned, a Garter report sheds light that that connected things will reach almost 21 billion by 2020. We see a significant progression only in the last two years, when we consider that in 2016 connected things were already in use worldwide- up 30% from just the previous year.
All in all, Cisco does present certain concerns. They don’t use the most modern of technologies, and certain buyers worry that due to their links to China, they’re more at risk of a trade. However, when you consider the fact that Cisco can quickly adapt to the ever changing financial climate. Have a reliable cash flow, and, are constantly proving themselves to be a safe investment for shareholders, we learn that Cisco Stock isn’t something you want to write off any time soon.
