Adam:
I disagree with you on that "[t]he logic connecting CSCO to ORCL is actually pretty strong." Actually beyond the fact they "both sell to the Fortune 500," the comparisons between the two companies are quite limited. While ORCL does in-fact provide software to the Fortune 500, I believe its initial push of its application products, where the growth is going to come from going forward, were geared toward the younger companies engaged in e-commerce and not necessarily the Fortune 500. So, to begin with even your "fact" connecting the two companies is somewhat limited in comparing the two companies.
What comes to mind is an article by Jim Jabak a year or so ago, when he was with MSN Investor, that focused on the comparison of ORCL and CSCO principally with respect to stock price, P/E ratio, and the rationale to attach a price to historic growth. The principal distinction Jabak pointed out between CSCO and ORCL was the nature of their growth and the cohesiveness of their technology. CSCO had achieved exceptional growth not only because of its core technology and competent execution by its management of its fundamental strategy, but also because of its acquisitive nature and strategy to purchase good, synergistic technology from other competing or potentially competitive companies that IMHO "threatened" CSCO's growth.
In contrast, ORCL rarely if ever acquired or bought technology. Instead, ORCL has truly built upon its own core technology from within. Its historic growth, which is obviously different than CSCO's, might be viewed has a more accurate picture of true growth, reflective of not only of ORCL's market share position in many sub-markets, but also the ability of its home-grown products to compete against competitors within each sub-market, namely its competitive position in each of this markets.
Can the same be said to hold true for CSCO? How has it stacked up against JNPR? Against RBAK? Hopefully, you can see my point, and perhaps realize the "connection" you see is simply not that "strong." JMO. |
