CSCO the biggest IP networking device manufacture is on sale today thanks to the bears. If I can get it, I will add 25% more to my existing shares giving me 75% of my target allocation for CSCO. Although the news was bad, there is a serious silver lining in this stock. My target is $24 within 12 months.
“Here is an opportunity to buy the market leader for IP networking equipment. The world is moving to IP and Cisco is expanding into ‘market adjacencies’ which should give CSCO a 12+ percentage growth rate.”
The Bear argument according to Credit Suisse
Balance Sheet is Stronger
Cisco meaningfully strengthened its balance sheet during the quarter. Roughly in line with historical seasonal trends, second quarter onerous tax penalty on repatriation. In per share terms, net cash increased by $0.30 to $4.47 from $4.17 in the preceding quarter.
Dividend Yield Increase
The company also reiterated its intention to issue a dividend during fiscal 2011 with a yield between 1 – 2%.
Repatration Penalty to be Lowered
$3.1 billion or roughly 8% of Cisco’s $40.2 billion of total gross cash is located in the U.S. Cisco again indicated that it will seek to repatriate the $37.1 billion balance residing abroad, if and when the U.S. removes or significantly lowers, (John Chambers noted he believes this will happen in his conference call) the onerous tax penalty on repatriation. – Source: Credit Suisse, CNBC.
Cisco Systems, Inc. designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use. The Company provides a line of products for transporting data, voice, and video within buildings, across campuses, and around the world. Its products are designed to transform how people connect, communicate, and collaborate. Its products are installed at enterprise businesses, public institutions, telecommunications companies, commercial businesses, and personal residences. The Company has five segments: United States and Canada, European Markets, Emerging Markets, Asia Pacific, and Japan. The Emerging Markets theater consists of Eastern Europe, Latin America, the Middle East and Africa, and Russia and the Commonwealth of Independent States. In September 2010, the Company acquired Arch Rock Corporation.