Showing posts with label CSCO. Show all posts
Showing posts with label CSCO. Show all posts
10/5/10
Consensus earnings growth does not justify share price for AAPL, AMZN, NOK, VMW, or CRM
9/21/10
Why MSFT ORCL RIMM VMW and HP will continue to post solid results.
We have been building a thesis that, regardless of the recent deceleration of economic growth in the US economy, the enterprise IT sector is on a bit of a roll that should persist for the next several quarters. Investors may want to look at business/enterprise IT technology for overweighted returns. Please note that 26% of the aggregate market cap of the sector is in cash and/or equivalents.
RIMM, MSFT, ORCL, VMW, and HP all reported better than expected results, and all presented fairly positive outlooks. Although CSCO met expectations, its outlook was positive. Our channel sources confirm that American business is investing in productivity at the desktop, in the pocket, and in the back office.
RIMM, MSFT, ORCL, VMW, and HP all reported better than expected results, and all presented fairly positive outlooks. Although CSCO met expectations, its outlook was positive. Our channel sources confirm that American business is investing in productivity at the desktop, in the pocket, and in the back office.
3/10/10
Cisco's Cr-3 Router - Streaming Media Players Drool
Cisco's CR-3 322 Terabyte carrier-grade router is three times faster that its predecessor CR-1 router. Not certain if this is a "change the Internet forever" product. However, it may be a tipping point for rich media providers if it is well adopted by carriers. Considering that carriers are constantly scrambling to keep up with capacity demand, its probably a very good possibility that sales of this $90,000 router will be brisk.
John Chambers hyberbolic messaging around the capabilities of the router focused on the benefits to rich media (in particular video), which has been clogging pipe for years. The scenario painted is massively available rich media streamed from the cloud. Basically, consumers and business everywhere will be able to access rich, high quality media streamed to any device at any time from the cloud with DRM protection on content.
The most obvious immediate beneficiary of this evolving content model is Netflix (NFLX), which would immediately benefit from a streamlined distirbution model for rented movies. Clearly, large media conglomerates that create and manage content would also benefit, as would content originators like sports leagues, musicians, and entertainers. So too would the surrounding ecoystems.
There are several Canadian technology companies that could immediately benefit from the network capacity gains offered by the CR-3 router. These three come to mind:
Intertainment (INT:TSXV) is a micro-cap media company that appears to have caught lightning in bottle with its Itibiti desktop streaming media widget. With NBC as an anchor customer, and with Microsoft choosing it as a reference Silverlight 4.0 deployment, Intertainment is building an influential client fan base for its always on widget. Using the widget, NBC streams content continuously to users while disintermediating the browser. By disintermediating the browser, fans can get entertained in fewer steps, and there is less chance that NBC has to pay Google for the privilege. A big win for NBC, and a big win for Microsoft's media business.
Neulion (NLN:TSX) is a small -cap media company and successor to JumpTV that operates online rich media sports programming for hundreds of NCAA schools, NHL, NFL, and MLS sports leagues. improved capacity for streaming media creates substantial opportunities for live data mashups, playlists, highlights, and rich easy-to-access inventoy of game footage and data. Increased capacity delivers more accessibility and more packaging, which delivers more revenue.
Fluid Music (FMN:TSX) is a small-cap media company that has amassed a low-cost royalty song portfolio. It utilizes multiple distribution and packaging methodologies to generate profits from the millions of songs in the catalog including: background music, packaged lifestyle music and consumer digital downloads via Puretracks. Actually, most of Fluid Music's $90 m in annualized revenue is generated from a small percentage of the total catalog. Although the music industry is on the forefront of streaming media, increased network capacity enables DRM compliant distribution, swapping, and packaging opportunities that were previously not possible. The bottom line for this company is that, by utilizing the cloud, it can generate more profit from the song catalog by providing better, more interesting access to more songs in the catalog.
There are probably dozens more Canadian companies that will directly benefit from increased network capacity, these are three publicly traded companies that come to mind immediately.
With respect to "changing the Internet forever" - there is no "forever" when it comes to the Internet. Grey hairs can remember 1999 when Napster bogged down the Internet as millions of people swapped millions of MP3s. At one point in time, carriers complained that Napster P2P file sharing represented 80% of traffic. Fast forward to 2007 when Bit Torrent P2P media file sharing caused similar capacity issues. The bottom line is that people will find ways to use up data capacity and carriers will always be scrambling for capacity. Wait until consumers begin swapping 3D movie files!
Disclosure: I do not own shares of any stocks mentioned above.
John Chambers hyberbolic messaging around the capabilities of the router focused on the benefits to rich media (in particular video), which has been clogging pipe for years. The scenario painted is massively available rich media streamed from the cloud. Basically, consumers and business everywhere will be able to access rich, high quality media streamed to any device at any time from the cloud with DRM protection on content.
The most obvious immediate beneficiary of this evolving content model is Netflix (NFLX), which would immediately benefit from a streamlined distirbution model for rented movies. Clearly, large media conglomerates that create and manage content would also benefit, as would content originators like sports leagues, musicians, and entertainers. So too would the surrounding ecoystems.
There are several Canadian technology companies that could immediately benefit from the network capacity gains offered by the CR-3 router. These three come to mind:
Intertainment (INT:TSXV) is a micro-cap media company that appears to have caught lightning in bottle with its Itibiti desktop streaming media widget. With NBC as an anchor customer, and with Microsoft choosing it as a reference Silverlight 4.0 deployment, Intertainment is building an influential client fan base for its always on widget. Using the widget, NBC streams content continuously to users while disintermediating the browser. By disintermediating the browser, fans can get entertained in fewer steps, and there is less chance that NBC has to pay Google for the privilege. A big win for NBC, and a big win for Microsoft's media business.
Neulion (NLN:TSX) is a small -cap media company and successor to JumpTV that operates online rich media sports programming for hundreds of NCAA schools, NHL, NFL, and MLS sports leagues. improved capacity for streaming media creates substantial opportunities for live data mashups, playlists, highlights, and rich easy-to-access inventoy of game footage and data. Increased capacity delivers more accessibility and more packaging, which delivers more revenue.
Fluid Music (FMN:TSX) is a small-cap media company that has amassed a low-cost royalty song portfolio. It utilizes multiple distribution and packaging methodologies to generate profits from the millions of songs in the catalog including: background music, packaged lifestyle music and consumer digital downloads via Puretracks. Actually, most of Fluid Music's $90 m in annualized revenue is generated from a small percentage of the total catalog. Although the music industry is on the forefront of streaming media, increased network capacity enables DRM compliant distribution, swapping, and packaging opportunities that were previously not possible. The bottom line for this company is that, by utilizing the cloud, it can generate more profit from the song catalog by providing better, more interesting access to more songs in the catalog.
There are probably dozens more Canadian companies that will directly benefit from increased network capacity, these are three publicly traded companies that come to mind immediately.
With respect to "changing the Internet forever" - there is no "forever" when it comes to the Internet. Grey hairs can remember 1999 when Napster bogged down the Internet as millions of people swapped millions of MP3s. At one point in time, carriers complained that Napster P2P file sharing represented 80% of traffic. Fast forward to 2007 when Bit Torrent P2P media file sharing caused similar capacity issues. The bottom line is that people will find ways to use up data capacity and carriers will always be scrambling for capacity. Wait until consumers begin swapping 3D movie files!
Disclosure: I do not own shares of any stocks mentioned above.
7/23/09
Worldwide Connectivity Statistics.
Some interesting numbers for technology investors interested in companies that participate in the connectivity ecosystem. Worldwide recession notwithstanding, there are some areas of significant growth which should bode well for companies in several sectors. The NASDAQ has outperformed the Dow index significantly this year, and some of the statistics below may reveal some of the reasons why. During earnings season AAPL, IBM, NOK, INTC, GOOG all beat consensus estimates and all but GOOG (which does not provide guidance) have indicated positive outlooks entering H2 2009. In fact, IBM has increased its guidance for the last half of the year. Investors should expect positive outlooks for both CSCO and RIMM when they report next, although positive outlook may have been priced into these stocks.
Notwithstanding a pause in growth in some areas during H2 2008 and H1 2009, the global march towards greater connectivity continues.
Internet Usage:
Total worldwide: 1.5 billion or 23.6% of total world population.
Most users: China with 288 million or 22.4% of population.
Regions with greatest penetration: N.A. 62.7%, EU 60.7%
For China to obtain similar levels of connectivity as North America or the European Union, another 500 million or so Chinese users would need to come online over the coming years, requiring massive investments in base infrastructure.
Emerging economies continue to drive internet connectivity growth, but are more likely to leverage fixed wireless broadband infrastructure to compensate for under-built wireline infrastructure. Even still, BRIC countries are likely to represent the vast majority of backbone investment as mega-operators in countries such as China and India continue to lay down the fundamental capacities to support growth in internet traffic.
Mobile subscriptions:
Total worldwide: 4.1 billion
Fastest growing regions: Middle East 32% CAGR and Africa 24% CAGR over past 5 years.
Basic mobile subscriptions in emerging economic regions are being used as a means by people to get access to basic services including banking. EEFT and First Data, among others, are likely to be vendors providing access to low-cost financial services options.
Mobile data services:
Total worldwide: 225 million
2009 growth rate: 93%
The most compelling growth rates that exist, even in the depths of a major recession, continue to be related to the mobile data services channel. Hence, investors continue to see better than expected results from companies associated with this niche. As stated many times in previous posts, the scale and complexity of the emerging infrastructure should benefit technology companies that supply solutions to this niche. Eventually, all current mobile subscribers worldwide are likely to adopt mobile data services at some point. The current penetration of data services into the mobile subscriber market is still very modest at 5.4%.
As the world continues to become more connected, capacity, capability, energy consumption and security should remain key issues. Worldwide, there should be more investment and innovation in these areas.
The top basket of Canadian stocks to think about in the connectivity ecosystem include: RIM, CGI, BWC, DWI, RCM, WIN, RKN, and TUN. Most of these companies have demonstrated excellent recent earnings performance, sustained and sometime expanding gross margins, with solid balance sheets and low debt ratios. These could represent a pretty good "connectivity" portfolio. Others to possibly consider include ABS, SVC, PIX, Q, and AXX.
I have probably overlooked a few key favorite stocks, feel free to add.
Disclosure: I own CSCO and BWC. I do not own any of the other stocks mentioned.
Notwithstanding a pause in growth in some areas during H2 2008 and H1 2009, the global march towards greater connectivity continues.
Internet Usage:
Total worldwide: 1.5 billion or 23.6% of total world population.
Most users: China with 288 million or 22.4% of population.
Regions with greatest penetration: N.A. 62.7%, EU 60.7%
For China to obtain similar levels of connectivity as North America or the European Union, another 500 million or so Chinese users would need to come online over the coming years, requiring massive investments in base infrastructure.
Emerging economies continue to drive internet connectivity growth, but are more likely to leverage fixed wireless broadband infrastructure to compensate for under-built wireline infrastructure. Even still, BRIC countries are likely to represent the vast majority of backbone investment as mega-operators in countries such as China and India continue to lay down the fundamental capacities to support growth in internet traffic.
Mobile subscriptions:
Total worldwide: 4.1 billion
Fastest growing regions: Middle East 32% CAGR and Africa 24% CAGR over past 5 years.
Basic mobile subscriptions in emerging economic regions are being used as a means by people to get access to basic services including banking. EEFT and First Data, among others, are likely to be vendors providing access to low-cost financial services options.
Mobile data services:
Total worldwide: 225 million
2009 growth rate: 93%
The most compelling growth rates that exist, even in the depths of a major recession, continue to be related to the mobile data services channel. Hence, investors continue to see better than expected results from companies associated with this niche. As stated many times in previous posts, the scale and complexity of the emerging infrastructure should benefit technology companies that supply solutions to this niche. Eventually, all current mobile subscribers worldwide are likely to adopt mobile data services at some point. The current penetration of data services into the mobile subscriber market is still very modest at 5.4%.
As the world continues to become more connected, capacity, capability, energy consumption and security should remain key issues. Worldwide, there should be more investment and innovation in these areas.
The top basket of Canadian stocks to think about in the connectivity ecosystem include: RIM, CGI, BWC, DWI, RCM, WIN, RKN, and TUN. Most of these companies have demonstrated excellent recent earnings performance, sustained and sometime expanding gross margins, with solid balance sheets and low debt ratios. These could represent a pretty good "connectivity" portfolio. Others to possibly consider include ABS, SVC, PIX, Q, and AXX.
I have probably overlooked a few key favorite stocks, feel free to add.
Disclosure: I own CSCO and BWC. I do not own any of the other stocks mentioned.
2/5/09
Cisco (CSCO-Q) Beats Expectations; Downward Guidance Good Opportunity for Longs
Cisco reported Q2 earnings last night and managed to beat lowered analyst expectations handily in terms of top-line and especially bottom line, reporting $0.38 EPS versus the consensus of $0.32 EPS. The Company generated $3.2 billion dollars in cashflow during the quarter on $9.1 billion in sales. The cashflow margin was 35% and the Company now has $29.5 billion dollars in cash on its balance sheet. Normally, this would be a very good spot to be...except for the 3rd quarter guidance offered by the Company.
Analysts had expected a flat Q3, but the Company has guided for a 15% to 20% decline in sales. As a technology company with one of the most international footprints around, Cisco has an unparalleled viewpoint on the strength of the world economy, and as expected, the first quarter of calendar 2009 looks really bad. The first half looks just plain bad.
The CEO continues to guide that it expected the Company to grow on an annualized basis between 12% and 17% for the long term. So there is longer-term optimism. With its huge balance sheet, cash generating capabilities, and its long-term growth prospects, it would be a great time to get into the stock after the traders are done pummelling it today.
I do not own Cisco stock...yet.
Analysts had expected a flat Q3, but the Company has guided for a 15% to 20% decline in sales. As a technology company with one of the most international footprints around, Cisco has an unparalleled viewpoint on the strength of the world economy, and as expected, the first quarter of calendar 2009 looks really bad. The first half looks just plain bad.
The CEO continues to guide that it expected the Company to grow on an annualized basis between 12% and 17% for the long term. So there is longer-term optimism. With its huge balance sheet, cash generating capabilities, and its long-term growth prospects, it would be a great time to get into the stock after the traders are done pummelling it today.
I do not own Cisco stock...yet.
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