Cisco (NASDAQ:CSCO) Investor’s Guideline
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As the competition between the Tech Companies gets aggressive, Cisco Systems (NASDAQ:CSCO) has a strong position among competitors. With its products in demand, Cisco (NASDAQ:CSCO) is expected to maintain this position in the long run. What makes Cisco (NASDAQ:CSCO) different from other Tech companies is that Cisco (NASDAQ:CSCO) sees the benefit in sharing its wealth with its shareholders through dividends. But as Cloud computing has started taking its share in the market, Cisco (NASDAQ:CSCO) is struggling with this technology evolution. This has left investors confused, but there are two elements that investors need to look into, before making an investment:
– Cisco System (NASDAQ:CSCO) has boosted share repurchase instead of raising dividends: This year alone, Cisco (NASDAQ:CSCO) has gone back to repurchasing shares and has spent a whopping $7.5 billion. This seems like a favorable act on Cisco (NASDAQ:CSCO)’s part as the share has fallen down dramatically and investors seem to have lost hope in the company. They believe Cisco (NASDAQ:CSCO) won’t be able to produce further growth opportunities. With these repurchases, Cisco (NASDAQ:CSCO) is aiming to increase earnings per share and with less investors on board, it has capital to spend, which was previously spent on dividends. If Cisco (NASDAQ:CSCO) starts picking up business again, the stock valuation will be much higher. So repurchasing stock at this stage is a good move for future plans.
– Restructuring might not do Cisco (NASDAQ:CSCO) any good: Cisco (NASDAQ:CSCO) at this point, is struggling to decide which strategy or plan would be more beneficial in the long run. It could either shift its focus entirely on cloud computing as all competitors are doing, or it could continue down the path its known for, which is providing connectivity equipment solutions along with added services and high margin software products. But with the on-going competition and rapidly changing IT sector, Cisco (NASDAQ:CSCO) needs to make a decision whether to continue in its traditional field of networking or branch out and stand in line with competitors and offer high in demand services.
In previous years, it has been seen that Cisco (NASDAQ:CSCO) hasn’t dealt well with pressure situations. The company made an announcement to cut down its work force by 6000, in August. This is the third time; the company is going for redundancy after 2011, when the company laid off 11,000 employees and another 4000 last year. This resulted in creating a negative image of the company, regardless of the fact that it did add jobs in other departments that have high growth potential.
Another factor that hindered success for Cisco (NASDAQ:CSCO) is its desire to build up its business in China, as there is a huge market to cater to with solid internet infrastructure. But due to bad vibes between China and US, the Company never went ahead.
Even though Cisco (NASDAQ:CSCO) still remains a profitable prospect for investors, it needs to make much more effort to compete in the market. The company needs to start providing latest technical services to its customers.