Cisco shares: Price analysis before buying or selling

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ISIN code: US17275R1023

Ticker: NASDAQ: CSCO

Index or market: Nasdaq

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Elements to consider before selling or buying Cisco shares

Analysis N°1

The strategic partnership operations and the acquisition of other companies by Cisco will of course significantly influence the price of its shares as they are particularly followed by investors.

Analysis N°2

We would also closely monitor the development of intelligent networks that could, over the long term, benefit Cisco by increasing global demand.

Analysis N°3

In the same way, we would also closely monitor the growth in the use of Wi-Fi and mobile technologies that offer certain opportunities to Cisco.

Analysis N°4

Concerning the negative points, we would of course keep an eye on the significant increasing development of Cloud servers that could lead to a reduction of sales and profit margins of the Cisco Company.

Analysis N°5

The competition is of course another important element of the fundamental analysis of Cisco. You must also take into account the major competitors of this group from among the leaders of this market as well as the open source competitors. When analysing the competition you should in particular monitor the development of new products and movements in the market share of these major players.

Analysis before buying or selling Cisco shares

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General presentation of Cisco

Knowing Cisco well before investing in its stock is essential if you want to make a good analysis of this stock, taking into account its activities and sources of revenue. This will allow you to better understand the main issues and possible threats it will face. Here is a detailed presentation of this group to help you:

The Cisco Systems Inc group is an American company which operates in the IT sector. More precisely, this company is currently the world leader in the design, development and sale of network equipment for the Internet. The company is listed on the Nasdaq stock market in the United States and is part of the Nasdaq 100 stock index.

To better understand the business of Cisco Systems, it is possible to divide it into different divisions according to the share of revenue they generate and in this way:

Switches and routers currently account for the largest share of Cisco Systems' revenues, with over 54.4% of sales.
Next are technology services and software, which generate 11% of revenue, including storage, Internet access, security, cabling, gateways, interfaces and connection modules.
Security products represent 6.8% of the company's turnover.
Finally, the remaining 0.1% comes from related activities.

It is also important to know the geographical distribution of the revenues of the Cisco Systems group. The company currently generates only 58.5% of its turnover in the Americas (North and South America). The rest of its turnover comes from Europe, the Middle East and Africa (26%) and Asia Pacific (15.5%).

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The major competitors of Cisco

Of course, the Cisco Systems Group has to contend with some major competitors in the various segments in which it operates and you should also take this into account when analysing this stock. Here is a quick overview of its main rivals.

Microsoft

First of all, the American computer and microcomputer multinational Microsoft specialises in the development and sale of operating systems, software and related hardware products. The group is also one of the largest market capitalisations on the Nasdaq and employs more than 148,000 people in more than 120 different countries.

Oracle

Another serious competitor of Cisco Systems is the American company Oracle Corporation, which is the company behind the database management system Oracle Database. The Oracle Group is currently one of the world's largest companies in terms of turnover and market capitalisation in the computer software sector.

IBM

IBM is an American multinational company which is mainly active in the fields of computer hardware, software and computer services. The group, which was created in 1911 with the merger of the Computing Scale Company and the Tabulating Machine Company, quickly became a reference and was the world's largest market capitalisation in the 1970s and 1980s.

HP

This American multinational company that used to specialise in electronics and instrumentation is now a leader in computers, printers, servers and networks, software and multimedia. The HP group is also one of the world's largest computer manufacturers and also produced almost half of the world's printers. Since 2015, the group has split its activities into two divisions with HP Inc for computers and printers and Hewlett Packard Enterprise for servers, software and business services.

Adobe

Finally, the last most important competitor of Cisco Systems is the Adobe Inc group which is a company specialising in computer and graphics software including video and audio editing software. Over time, the group's software has become a real reference in the video editing, photo editing, audio editing and illustration and graphics sectors. It is therefore still one of the leaders in these segments today.

The major partners of Cisco

Salesforce

In 2013, Cisco Systems and Salesforce implemented a partnership to develop and sell communal solutions for professionals.

Apple

In 2015, Cisco Systems announced a partnership with the American group Apple in order to develop more devices using iOS with companies that already worked with Cisco.

Ericsson

Still in 2015, the Swedish company Ericsson and Cisco Systems signed a technological and sales agreement with the objective of becoming serious competitors to Huawei in the network equipment and services sector.

Valeo

Finally, in 2017, Cisco and Valeo announced their partnership in smart mobility with a connected parking solution. This partnership should provide interesting innovations in the coming years.

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The factors in favour of a rise in the Cisco share price:

Firstly, of course, the good international expansion strategy that the group has pursued for many years. Thanks to this strategy, Cisco now markets its solutions and products in many countries. It is thus better protected against the risks of geographically localized economic downturns.

The Cisco Group is also generating attractive margins and good profitability thanks to another strategy, this time in terms of the economies of scale it can achieve. These economies offer an intelligent and interesting reduction in production or supply costs.

In addition to a good geographical diversification of its sales, Cisco also benefits from an excellent diversification of its products and solutions, which allows it to be present in many segments of its business sector and to reach sophisticated markets.

Of course, Cisco's positioning in relation to its competitors and its industry is another undeniable advantage of this value. Indeed, let us recall here that Cisco is currently the leader in its field on the market. This gives it many advantages, including a strong negotiating power with its suppliers and partners.

Still with regard to Cisco's assets, we can mention the great popularity of this brand due to its many innovations. It should be noted that the group has a particularly strong research and development division that enables it to develop technological and innovative products. In particular, Cisco focuses its efforts on experimenting with better value products over the long term.

Finally, stock market investors also appreciate the good financial and economic performance of this company, which gives them a high level of reassurance.

The factors in favour of a drop in the Cisco share price:

If the Cisco Group has a good chance of developing positively in the years to come and therefore its share price on the stock market is also likely to develop positively, it is also necessary to take into account the possible shortcomings of this value and therefore to know the weak points that may affect this development. Here is therefore the list of the main weaknesses of this company.

Firstly, storage networks are currently in decline, which may of course, in the long term, be detrimental to Cisco's business and profitability.

It is also regrettable that the group is not more active in the field of BPO technologies and markets, whereas the other world leaders in this sector are already well established in this area. This situation is therefore likely to lead to a loss of market share for Cisco in the more or less long term.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What types of products are marketed by Cisco?

The Cisco group manages to stand out from its competitors through the diversity of its products on the market. These include, of course, network hardware, Network Management, Cisco IOS and NX-OS, interfaces, SAN storage networks, wireless transmission systems, telepresence, IPTV, voice over IP and data processing centres. These segments should therefore be known and studied as part of your analyses of this value.

When and how did Cisco's IPO take place?

The date of Cisco's IPO was 16 February 1990. The company thus entered the American Nasdaq market and more specifically the Nasdaq Global Select Market at a price of 10 cents per share. But this introduction will not reach the hoped-for performances and this failure will moreover lead Leonard Bosack, its managing director at the time, to resign.

Who are the main private shareholders of Cisco?

Cisco Group is partly owned by private and institutional investors including The Vanguard Group for 8.12%, Capital Research & Management for 6.24%, SSgA Funds Management for 4.50%, BlackRock Fund Advisors for 2.29%, Putnam for 2.11%, Wellington Management for 1.62%, T Rowe Price Associates for 1.50%, Northern Trust Investments for 1.46%, Geode Capital management for 1.44% and Managed Account Advisors for 1.22%.

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Analysis before buying or selling Cisco shares