Sunday, March 20, 2011

"Cisco declares a dividend, usually a sign with a large cap tech stock that high growth has ended . So where is the growth in their sector?

Dow Jones Industrial Average 11,859 (Down) Week ending 03-19-2011 

Cisco Systems Inc. (Symbol CSCO, $17.14) has been growing for years by buying 5 to 6 small companies a year to add to their core competency's and maintain growth. The company's 5 year growth rate is 7.93 % . But currently with annual revenues of 42 billion dollars it is very hard to have any growth impact without a major acquisition. It appears now, with the stock down 34.2% for 12 months, that John Chambers and the Cisco board does not currently see a business that fits in with their long-term strategy goals so they have decided to declare a dividend instead. They have 40 billion in cash and short term investments so it is not like they couldn't do it at any time if they wanted to. Unfortunately, when other large techs like Microsoft and Intel have done this their stocks they have sat dead in the water for years. So I would say to avoid this stock for the time being.

The terrible events that took place in Japan are definitely going to cause supply interruptions in electronics and other industrial parts. Wafer manufacturing, Flash memory, Electronic epoxies and automotive electronic parts will all be affected. Brilliant new century idea: STOCK SOME FRIGGIN INVENTORY AT YOUR COMPANY AND IN THE SUPPLY CHAIN! Then when we have supply interruptions and you embarrassingly have to report it to wall street and you have to explain to your management why your company stock took an 8 point hit, you will tell them that it is actually not a problem. The Japanese are a resilient people and they should get this stuff back on line quickly with help. I admire their spirit and determination. Then we can get back to Shogi.

So if Cisco is not going to get it done for you, where should you look for growth?  Just a note here and I have witnesses. I start saving my logos for my blog on Thursday in preparation for writing it. So when I went to WAWA to get some dollar change for the car wash that my car desperately needed and pick up a $3.00 copy of Investors Business Daily, I was surprised and a little disturbed that IDB had Riverbed Technology Inc. (Symbol RVBD, $37.52) not only ranked, but ranked NUMBER #ONE on their Top100 list for 03/21/2011. Riverbed is where I am going to lead you to for growth in this sector. 5 year sales growth of 80.50% and projected long term earnings growth of 27.6% make Riverbed the best choice in this sector.

My suggestion though is that Tech stocks will be under pressure this week, as these supply shortages start popping up, and that you look to buy this stock on a little bit of a pullback as the other tech stocks get beat up.  If it does not go down, then feel free to buy it at this price at the end of the week and hold it for a one to three year investment.

 Everyone should continue to support Japan both financially and with prayers. Even after the nuclear issues have been resolved, the country still has sustained tremendous damage and will need allot of assistance.  

Japanese Proverb:
“Fall seven times and stand up eight.”


1 comment:

  1. April 12, 2011, 7:05 p.m. EDT

    Riverbed shares spike in after-hours trade by Carla Mozee, MarketWatch

    LOS ANGELES (MarketWatch) — Shares of Riverbed Technology Inc. jumped Tuesday evening after the company issued a quarterly financial outlook that surpassed Wall Street’s projections.

    Riverbed, which offers “cloud computing” and other IT services, said it now expects first-quarter adjusted earnings of 19 cents to 20 cents a share on revenue of $163 million to $164 million. Analysts surveyed by FactSet Research were looking for earnings of 18 cents a share on revenue of $161 million. Its shares (RVBD 35.20, +4.28, +13.84%) surged 13% to $35.02.