So the share price failed to make any recovery yesterday after an 8% crash following earnings and a further 0.5% drop the next day. My concern is where the share price will be in 2 or 3qtr time when consecutive declines in revenue become the norm. How are markets likely to react? I have a lot of stock I should have sold after the last earnings call but my manager convinced me they were set for $40+.
3 replies (most recent on top)
probably 34 or so.
Cisco's keep-alive is it's massive legacy install base. There were two good decades where every enterprise facility, as they enabled IP connectivity, brought in more than a few Cisco routers. With time, that affinity, brand recognition, and easy-of-use flourished. There has always been talk around elements such as "SDN" changing the industry; but how many legacy enterprise remote sites are going to convert over to SDN once it becomes much cheaper on hardware/management and ongoing budget? Cisco needs to figure out how to financially forklift upgrade the mountain of recurring revenue entrenched in all that legacy hardware. The idea is great that Cisco will switch to subscriptions; but the difference now with technology, compared to early Cisco; are the level of available choices. It's not Cisco's fault, it's a big industry shift. Not sure if there would be a way to manage through cost and revenue reallocation of all this. The real tough question Cisco executives need to ask is, how they can lock into a new market facet that customer's are almost forced to use Cisco, because it's the obvious reliable, cost effective, and best business support choice among new choices in technology vendor implementations. Cisco has had a great run, but other cheap, reliable solutions (SDN) are going to take over market share, it's just a matter of how that chipping-away takeover will take; and what other product/offering elements Cisco will be able to transition into to replace the massive hardware legacy out there.
My plan is to hold into January next year, reinvest the dividend in the meantime, and shoot for $35-$40 particularly if tax reform happens. No point in selling now. It's at worst a hold at this point. Hope that helps.