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Analyst Research Report Snapshot


Cisco - Company Profile - Running out of steam




Indigo Equity Research


18 Feb 2013





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Cisco - Company Profile - Running out of steam Investment thesis - Running out of steam A fundamental problem is slowing organic revenue growth due to weak networking …… Since 2011, Cisco has turned itself around; re-organised, cut costs & raised productivity. EPS, revenues & margins have benefitted from acquisitions and diversifying into services, software and other products (eg. video, collaboration, …) and lower tax rates. These drivers have some momentum left, but are running out of steam. Cisco's ultra low tax rates look unsustainable and EBIT margins are at the top end of their historical range. Valuation multiples have rebounded from historical lows and now have little upside left. In summary, we have modest expectations for Cisco due to a lack of enough catalysts. Mixed 2013 Q2 results - Slowing organic growth and margins fell slightly. Revenue growth continues to slow across most divisions. Cisco is hostage to the macro environment which remains weak. But guidance was cautiously optimistic. .. - We estimate organic revenue growth at c. 3%, excluding acquisitions (eg. NDS). …. This c. 40 page report includes: SWOT analysis, investment thesis, fundamental & DCF valuation, significant recent events, operations analysis, ten year financial analysis, business model, strategy, industry overview, analysis of latest Q results, …. Independent, buy-side, fundamental, financial analysis. www.indigo-equity-research.com

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