Anyone can reinvent themselves as the saying goes. While Cisco has been doing just that, some think it's gotten a little too ambitious.
FBR Capital Markets analyst Scott Thompson downgraded the stock Thursday to underperform and slashed his price target to $17 from $22.
"We expect it may take longer than management expects to create organic software growth that is able to offset declining core routing and switching revenues," said Thompson in his report.
Cisco (CSCO) recently acknowledged that routers and switches still make up nearly half of its revenue but pointed to rapid growth from data center sales, wireless networking and online video services.
But Thompson points out that Cisco's plan to generate $12 billion of software-based revenue over the next three to five years seems aggressive. He calls it a "REAL stretch-goal" that will be hard to achieve without a major acquisition.
The Debbie Downer report pushed Cisco's stock down more than 4%, and gave StockTwits traders plenty to chew on.
Thanks for sharing. The thing that stood out for me was a reminder about how much cash Cisco has on its balance sheet.
Plus, the company has been buying back stock and issuing dividends. Those are all healthy signs.
Haha. Well, I, unsurprisingly, say to wait. Without a crystal ball, it's way too much of a guessing game.
As it evolves into other areas, Cisco faces stiff competition from the likes of IBM, Alcatel-Lucent (ALU) and Hitachi (HTHIY) to name a few. I can't imagine it's not looking at ways to knock one or more of them down a peg or two.
Say it ain't so. Are we heading for a death cross?
I like to end on a high note. As I noted higher up, Cisco does continue to pay a dividend and that usually sits pretty well with investors.
Maybe Cisco is being too aggressive...but maybe this is also just a temporary setback.
Standard & Poor's lowered its credit rating for Spain on Wednesday, in a move that could complicate Madrid's effort to avoid requesting a financial bailout.
S&P cut Spain's long-term credit rating two notches to "BBB-" from "BBB+," the ratings agency said in a statement. It also lowered the nation's short-term rating and said the long-term outlook for Spain is negative, meaning it could lower the rate further.
The move reflects the risk MOREBen Rooney - Oct 10, 2012 6:22 PM ET
The United States lost its pristine AAA credit rating a year ago Sunday, but you wouldn't know it by looking at the Treasury market.
"The telltale sign was day one: Standard and Poor's downgraded the U.S. credit rating on a Friday night, and Monday morning, U.S. Treasuries exploded," said Paul Montaquila, head of fixed-income trading at the Bank of the West. "Since then, it's been a year of relentless purchasing and MOREHibah Yousuf - Aug 5, 2012 8:20 AM ET
Goldman Sachs (GS) told investors early Tuesday to buy JPMorgan Chase (JPM), and stop buying Morgan Stanley (MS).
JPMorgan Chase was upgraded to a so-called "conviction list buy," which, in Goldman Sachs' parlance, means run out and buy it. Conversely, Morgan Stanley was downgraded to a "hold" from a "buy."
Both banks have seen share prices fall precipitously this year, because of what Goldman's analysts say are "idiosyncratic events," including potential repercussions MOREMaureen Farrell - Jun 26, 2012 12:26 PM ET
Another day, another downgrade in Euroland.
Egan-Jones lowered France's credit rating one notch to "BBB" from "A" on Thursday.
The ratings agency pointed to France's rising debt and slowing economic growth. It also warned that France is fond of subsidizing its banks, which could prove costly for the government.
In a subtle turn of phrase, Egan-Jones summed up the situation in France thusly: "Disastrous trend and the worst has yet to come."
While France MOREBen Rooney - Jun 14, 2012 3:39 PM ET
|Why Windows 10 WiFi sense is freaking everyone out|
|Upgrading from Windows 7 or 8? You'll love Windows 10|
|Stick a fork in Whole Foods?|
|Facebook built a giant Internet drone|
|Prepare for gold prices to plunge...as low as $350|