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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 77.80-1.9%Dec 12 9:30 AM EST
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To: RetiredNow who wrote (56806)1/19/2002 11:11:09 AM
From: Stock Farmer  Read Replies (1) of 77400
 
Interesting article. Indicates that the decline in spending may be over. That's good. Gear makers won't go out of business (we didn't think they would).

Next question is the shape of the recovery and growth prospects for the gear makers from here.

Restating figures:

By 2006:
10% increase in large customers by 2006 (> 1001 employees), max subsequent growth = 5%

38% increase in mid size enterprise customers (101-1000 employees), max subsequent growth = 33%

110% increase in small (20-100 employees), max subsequent growth 138%

So the increase in big customers with megabucks to pay for networks is pretty much over. The "mid size" growth is looking like 8% per year as far as big-ticket spending is concerned (new installs). And all the real growth 20% p/a is packed amongst the midgets.

Who have pockets that are not so easy to pick as the big guys. Often more filled with lint and a glint of gold than gold itself. Recipe for commoditization.

I'd look to the big telcos to act as service providers into this niche, and thus to see continued growth in integrated multimedia VPN services. That's the market we should be looking to see Cisco crack seriously... if only to get half way to the kind of growth they need to support the current stock price.

John
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