The competition are the walking dead. For many, their strategic response will be to try to avoid bankruptcy. For others, it will be to shrink to survive. Cisco will emerge from the tech recession stronger vis a vis its competition than before the recession.
Cisco reported high end router sales were down 10% yet they gained market share. That means Juniper is now probably below a 25% share of high end router sales. Cisco grew sales over last year while sales at NT, LU and JNPR were down a combined 43%.
Cisco has $21 billion in cash and no debt. LU and NT are saddled with huge debtloads. Cisco throws off hundreds of millions in free cash flow each month.
....Cisco, which saw revenue grow 2 percent in the third quarter from the same period last year, managed to show an increase, while many competitors posted declines. Companies that faced or are facing difficulty in their most recent quarter include Juniper Networks and Sycamore Networks.
"We believe that working in Cisco's favor is the virtual complete self-immolation of its primary competitors for the service provider market. Nortel and Lucent are the walking wounded, Marconi is on the ropes, and Alcatel appears to have a full set of challenges," said Needham analyst Tad LaFountain in a research note.
"In a perverse way, the decimation of the service provider market is probably the single best thing that could have happened to Cisco," he said.
Other analysts echoed those comments, adding that Cisco's success is partly attributed to the fact it gets the majority of its revenue from enterprise customers, not from ailing telecommunications providers as its rivals do. Routers accounted for 30 percent of Cisco's sales in the quarter, switches represented 40 percent and services were 17 percent, with access products and other categories making up the remainder.
Cisco's balance sheet is also in better shape than its peers. Cisco's ended the third quarter with $21 billion of cash, short-term investments, and investments with no short- or long-term debt....
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