Cisco Systems, Inc.
Equity Report
Analyst: Misbah Maaheen Razmi
Ticker: CSCO
Forecast Horizon: 12 Months
Target forecasted price: 21.7
Price: Date:
Recommendation: Hold
1. Highlights
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Net sales of over $43 billion, increase in the sales by 8% compared to last year.
Increase in the service revenue by 14%, accounting to 20% of the total revenue.
Balanced sales across all the geographic regions.
Improvement in the line of products.
Growth in the new products revenue by 14%.
Well positioned for the future.
2. Summary of Analysis
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Market capitalization: 106.64B
Cash: $46.74B based data reported Jan 28, 2012.
Last 12 months revenue: $44.84B Trailing Twelve Months, Jan 28,2012.
Operating Cash Flow: 11.24B on Jan 28, 2012
Free cash flow: $1.28B on Jan 28, 2012
Forward Annual Dividend Rate4: 0.32
3. Justification for Hold Recommendation
CISCO's earnings were fluctating last. year. The earnings did not look good in the fourth quarter.
The revenue rose, however the stock price fell. Also the profit margin fell, sales reduced owing
to the tough competition from HP and Juniper.
However CISCO started paying dividends last year. It has invested huge amounts of money for R
and D, it is launching newer innovative products. CISCO is working on integrating platforms.
CISCO is also focussing on its core processes. CISCO is taking
into consideration cloud and virtualization. The financial ratios still look good and I feel that
CISCO will be able to continue its market dominance. Hence I will recommend to hold CISCO
stock.
4. Qualitative Analysis
a) Company Profile
CISCO manufactures the Internet Protocol based networking devices. It provides devices for
routing data for voice, direct data and video traffic. It also manufactures set top boxes, optical
networking equipment’s, IP telephony equipment, Internet conferencing systems, security
systems, etc. The products are sold to large enterprises,...