Tomahawk, WI 12/10/2013 (BasicsMedia) – Cisco Systems, Inc. (NASDAQ:CSCO) is a leading communications equipment maker. Its routing system is used by the biggest telecoms operators in the world. For investors looking for networking stocks, CSCO is always high in the list; in fact, it is the measuring yard with which most investors bet on similar stocks.

This explains why when Cisco Systems, Inc. (NASDAQ:CSCO) issued a narrow guidance for the current quarter in which revenue is expected to decline by as much as 10 percent, a related stock suffered just the same way as CSCO’s. Ciena Corporation (NASDAQ:CIEN)’s stock pulled back by as much as 20 percent since CSCO announced narrower than expected outlook for the fiscal 2014 second quarter. In comparison, CSCO has dropped 13 percent in stock price.

Looking at the suffering of Ciena due to CSCO’s narrow projection, it is clear that most investors are at loss as concerns networking stocks. Investors should have it in mind that the problem is not the industry which led to narrow guidance by the industry giant CSCO.

Networking industry is very much alive and even rewarding. From the U.S. to China and other emerging markets, telecoms operators are upgrading their systems and replacing networking infrastructure to enable them offer high-end communication services. This means that there is a lot of money for networking companies. However, for Cisco Systems, Inc. (NASDAQ:CSCO), the problem is brought about by strong China competitors that are using price strategy to dry its market.

Cisco Systems, Inc. (NASDAQ:CSCO) typically offers high-end networking equipment and at premium cost. This is good for its profitability; however, competitors are exploiting this strategy to wage market war. And they are winning in emerging markets where consumers are price sensitive.

But even as competition mounts against Cisco Systems, Inc. (NASDAQ:CSCO), it is not a–must-happen case that it reports revenue lower by 8 -10 percent in the current quarter. The company’s performance in the U.S. and Europe is still good and these are markets with higher margins. Also, CSCO’s superior cloud-based networking solution has the potential of offsetting any financial impact that may be brought about by red-hot equipment competition.

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