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Cisco former darling looking good for it’s age?

Back in the day, when I first started my REAL job, we were starting to build one of the first Corporate Wide Area Data Networks in the world, but we needed networking equipment to connect the many smaller, leading to larger, leading to larger still and geographically diverse networks, and we found that in a small company call Cisco Systems. This was in the late 80’s and early 90’s and back then the extent of my investing expertise was, “Buy whatever Mutual Fund I was told to buy” (not that there was anything wrong with that, just I wasn’t very sophisticated at the time).

Cisco was the darling of the Internet boom of the late 90’s and then came on hard(er) times when the Internet boom collapsed (however, it never took the whole scale destruction of its contemporaries like Nortel, or Lucent). It continued to plug along and have good sales, and make seemingly good business decisions riding out the storm.

Cisco announced its Third Quarter results and they are quite impressive, with sales up 21% and net Income up almost 34%(compared to Q3 2006). Useful and good to see Cisco show some life, and the rest of the industry seems to be coming out of its death spiral (the companies that are left that is).

An interesting open-ended quote from John Chambers however:

“In our view, we are in the midst of a unique market transition, where all of the action is going to the network and our vision for the network as a platform for all forms of communications and IT has become a reality,” Chambers continued. “While we are very pleased with our continued growth, our communications and collaboration technologies are enabling the second phase of the Internet, or Web 2.0, which is redefining how people, companies and countries collaborate in ways never before realized.”

Seems like an odd statement at the end, where he is saying, “We are doing well, however…”, but I am sure that is not what he meant, just an interesting quote.

Here are some watch words to be very wary of:

  • Web 2.0 : this is a description of the next phase of the Internet Marketing game. Lots of companies appearing saying they are in this space, but what do they actually do?
  • IPV6 : A larger address space, so that EVERY device in the world can be connected to the Internet without any “tom foolery” for addressing it, however, it was proposed at least 5 years ago, and is still making little traction.
  • SMB: Small or Medium Business networking equipment, where Cisco makes its bread and butter.

Investing Advice ?

Should you invest in Cisco? I don’t know, go read up on it, learn about their products and ask yourself whether you want to be in this high(er) risk area. Me I own some $CSCO, but not much.

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