2. INS was not a bad deal for LU, but it would have been for Cisco. ...For
Lucent, professional services is a market, in and of itself, not a means to sell more boxes. Adding INS makes it, arguably, the
pre-eminent networking services company.
Cisco, on the other hand, can't afford to piss off Anderson, EDS, et. al, as a huge
proportion of its revenue is involved in customer situations where these players are a factor. .
Although partially accurate I think it's more accurate to say that Cisco believes that a vertical model (being all things to all people) is too costly and holding that overhead will slow down Cisco's growth. This is Cisco's "New World" approach - using partners in services, and application development to bring new products to the market. Cisco believe this leaves them lighter on thier feet and better able to address customer needs. It's a philosophy. Vertical organizational approch versus horizontal with partners - bringing best of breed products and services to customers.
. Cisco's carrier revenues are now more than $2.5 billion (annualized), but a decent percentage of that is MultiService Access routers
sold through to enterprises (this product category is growing like a weed).
I continue to wonder where you get your data. I can't find anywhere that this is reported. Can you point me in a direction???
Total spending by carriers world-wide is more than $200b. LU's
carrier revenues are more than $25b. IMHO Brian is right to question the immediacy of Cisco as a threat to LU or NT's carrier business.
Cisco does not compete in Wireless. It does not compete in Optical. It does not compete in network software. It does not compete in
terminating central office telephone switches (class 5).
Wireless JV with Motorola and Philips...again this ala Cisco's horizontal approach and best of breed. I'm not saying this is the right tact, but it is Cisco's approach. I don't suspect you'll see Cisco do much in the categories you mention but they will continue to partner and bring complete solutions to market. It is Cisco's belief that you don't have to own these technologies in order to serve a customers needs. So, just because Cisco doesn't have optical products or interfaces to 5ess (which is quickly changing as you are aware) I don't take this to translate into "cisco is not a threat" in the carrier market. It appears to me Cisco is growing this business quite quickly.
Contrary to common perceptions, I am not anti-Cisco. As I said yesterday, we will go overweight on CSCO today and hope to ride the
upward revisions. I still think it is overvalued at this multiple, particularly vs. LU and NT. 63x CY2000 EPS is alot to pay for 26% expected
EPS growth when LU and its expected 27% EPS growth is selling for 39x. CSCO is worth a premium to LU, but not 55%
HUH??? :You've lost me now. Let's see, "Cisco is overvalued at this mulitple"> "Cisco is worth a premium to LU (re: EPS) but not 55%"... "We will overweight on Cisco today". HUH??? Is this doublspeak???
BTW, the Cash hoard is one of the things I like least about CSCO....Buy back stock or use it to invest in the business, don't sit on it.
Cisco doesn't need that much cash to do acquisitions, since almost all of them are done with stock
Maybe, maybe not. ;)
OG |
