Cisco Systems, Inc
I bought Cisco (CSCO) in two batches on 10 January 2011 at $20.80 and on 22 June 2011 at $15.50. Subsequently, I sold CSCO at $25 on 1 July 2014. As a result, my profit of this investment is 41.3%.
CSCO is technology giant in the network industry - its products is always ranked at no. 1 or no.2 in its own product category. Like Apple and Microsoft, CSCO has large cash and cash equivalents in its balance sheet as a result of its strong stickiness of its products and course certifications. CSCO has sufficient earning power despite of the shrinking annual budgets set by companies for technology-based capital expenditure in recent years.
Mr Market undervalued CSCO as if CSCO has no ability to resolve the impact on its revenue caused by governments' shrinking capital expenditure budgets. In addition, John Chamber, current CEO of CSCO prefers to paint 'doom' picture on CSCO's future in certain points of time, making Mr Market to value it lower.
John Chambers recognised the problems in CSCO. His solution is to reduce the labour force, creating $1 billion annual saving together with delaying the chain of commands for quicker decision making.
With these mentioned points above, it is an interesting turnaround story, which I would like to invest in as long as the company has sturdy balance sheet.
I did not expect that CSCO began to pay dividend and gradually increased dividend twice in few months later. CSCO is getting more shareholder friendly company.
As I hold CSCO shares, I gradually learnt new things such as SDN (software defined network). Last year, a investment banker analyst published an analyst report citing that SDN will reduce CSCO's profit margin significantly and affecting CSCO's ability to generate sales at ease. However, in few months later, John Chambers recognised the threat of SDN long time ago and found the solution. His solution is to invest in start-up firm that is ran by former CSCO employee for SDN development and bought the remainder stake of that firm it doesn't own. As a result, CSCO produces a new product that is based on hardware and software interface.
At the same time, CSCO makes significant investment in cloud computing and internet of everything. For these two areas, I think CSCO will be able to maintain profit margin.
However, I do not know who will be winner for SDN competition in few years time. With uncertain future which I cannot make logical guess, I sold CSCO shares. It is good time for me to reduce technology exposure to my portfolio.
I bought Cisco (CSCO) in two batches on 10 January 2011 at $20.80 and on 22 June 2011 at $15.50. Subsequently, I sold CSCO at $25 on 1 July 2014. As a result, my profit of this investment is 41.3%.
CSCO is technology giant in the network industry - its products is always ranked at no. 1 or no.2 in its own product category. Like Apple and Microsoft, CSCO has large cash and cash equivalents in its balance sheet as a result of its strong stickiness of its products and course certifications. CSCO has sufficient earning power despite of the shrinking annual budgets set by companies for technology-based capital expenditure in recent years.
Mr Market undervalued CSCO as if CSCO has no ability to resolve the impact on its revenue caused by governments' shrinking capital expenditure budgets. In addition, John Chamber, current CEO of CSCO prefers to paint 'doom' picture on CSCO's future in certain points of time, making Mr Market to value it lower.
John Chambers recognised the problems in CSCO. His solution is to reduce the labour force, creating $1 billion annual saving together with delaying the chain of commands for quicker decision making.
With these mentioned points above, it is an interesting turnaround story, which I would like to invest in as long as the company has sturdy balance sheet.
I did not expect that CSCO began to pay dividend and gradually increased dividend twice in few months later. CSCO is getting more shareholder friendly company.
As I hold CSCO shares, I gradually learnt new things such as SDN (software defined network). Last year, a investment banker analyst published an analyst report citing that SDN will reduce CSCO's profit margin significantly and affecting CSCO's ability to generate sales at ease. However, in few months later, John Chambers recognised the threat of SDN long time ago and found the solution. His solution is to invest in start-up firm that is ran by former CSCO employee for SDN development and bought the remainder stake of that firm it doesn't own. As a result, CSCO produces a new product that is based on hardware and software interface.
At the same time, CSCO makes significant investment in cloud computing and internet of everything. For these two areas, I think CSCO will be able to maintain profit margin.
However, I do not know who will be winner for SDN competition in few years time. With uncertain future which I cannot make logical guess, I sold CSCO shares. It is good time for me to reduce technology exposure to my portfolio.
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