Hi Adam,
<<I'm not sure I understand why Cisco cannot continue to acquire products and companies ... need to see some core market stability and price stability in their share prices ...>>
Could be that ...
(a) core market unit volume drastically reduced in size for any given time frame due to over capacity in infrastructure and tightening capex spending, i.e. annual market size drastically slow in growth rate or even shrinks,
(b) massive over capacity in production driving down end-user price per unit, ala DELL, GTW etc
(c) leading to shrinking of absolute size of new-add pie,
(d) coupled with fewer VC venture formation due to imploding exit avenue (no IPOs) and more competitive market place dominated by big boys such as CSCO (doing more of own R&D),
(e) resulting in fewer purchase-able companies,
(f) necessitating serious in-house research and development efforts,
(g) with smart folks hired on cash compensation, resulting in higher cash cost,
(h) further reducing E in P/E, and lowering P further ...
It is possible, because the chain of logic is more powerful than the previous "virtuous circle" story.
Minus the maestro's financial sleigh of hand, people and companies will have to revert back to working for a living.
The temperature of the environment has changed, and evolution moved the goal post for survival.
Chugs, Jay
Disclosure: I still got a watch and brief residual position in CSCO, just to force myself to read the news. |
