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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (40009)	11/12/2010 9:19:23 AM
From: gcrispin	Read Replies (3) of 78704

CSCO is an interesting speculation as historically the company has outperformed the market and is strong financially. But I think, at best, it's a market performer and I'm not crazy about the valuation of the market. A couple of points. The downgrades haven't started. Yahoo lists thirty-five analysts rating CSCO as a buy or strong buy. Only three list the company as underperforming. I suspect that ratio will change. One of the reasons Chambers listed for the drop was orders from state governments. The continued budget problem by state governments won't change any time soon. "Everyone in the world will probably see government spending" fall, said Mr. Chambers in an interview, adding that "we were surprised how quickly it occurred." About the decline and softness in Europe, Mr. Chambers said: "I don't think those are specific to Cisco at all." Declining margins suggests increased competition. Decreased demand will increase price cutting for the remaining business. Hardware is a commodity and I think there will be more companies chasing a smaller piece of the pie.

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