MSFT - Cisco: From Market Leader To Struggling Competitor

2024-07-01 10:52:48 ET

Summary

• Cisco, once a star during the dot-com bubble, has remained focused on traditional IT products and services.
• Over the last two decades, the company appears to have lagged behind its peers due to a lack of innovative offerings.
• With limited exposure to AI, an inability to innovate as customers migrated to the cloud, intense competition in cybersecurity, and weaker customers delaying IT investments, the company faces significant challenges.
• The stock fails to excite investors, and combined with flat multiples in recent years, I assign a "Hold" rating to the company.

Introduction

Companies rise and fall, and Cisco ( CSCO ) has experienced this to a remarkable extent. It became the largest company in the world during the dot-com bubble, only to lose 80% of its market cap within a year.

Since then, Cisco has continued to be a crucial provider of IT systems, enabling enterprises to build their networks securely. However, over time, it seems to have lost the competitive edge it once had in the early 2000s....

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