Is Cisco Systems Stock a Buy?
Cisco Systems (NASDAQ: CSCO) must transition its portfolio to remain competitive in the context of accelerated consumption of cloud computing services, which has been induced by the coronavirus. Its fiscal fourth-quarter results released this week revealed that legacy network businesses remain a significant drag to its performance. Because of these important challenges, the stock trades at modest valuation multiples. Thus, should investors take this opportunity and bet the tech giant will succeed in adapting its portfolio?
Cisco posted better-than-expected fiscal fourth-quarter results, but the year-over-year 9% drop in revenue to $12.2 billion remains weak. More importantly, the top-line decline confirmed an important contrast between the company's cloud businesses and its legacy activities.
As usual, management didn't provide the individual performance of each product, but CEO Charles Robbins mentioned some strong spots during the Aug. 12 earnings call. For instance, he said the collaboration tool Webex and the monitoring solution AppDynamics generated strong revenue growth. Also, cloud security boosted the company's security segment, which grew 10% to $814 million.
Source Fool.com
