Tomahawk, WI 01/14/2014 (BasicsMedia) –  Cisco Systems, Inc. (NASDAQ:CSCO) is the leader in cutting-edge communications and information technology equipment and solutions worldwide. The company designs, manufactures and markets networking products. As with most global enterprise, the company’s focus is on dominating the emerging markets. However, it is also confronted by intense competition, high cost of operation and perception issues liked to the alleged doping by the U.S. National Security Agency.

It is however important noting that despite these challenges, Cisco Systems, Inc. (NASDAQ:CSCO) remains in good standing against rivals. What now needs to be done is a change in approach to the emerging markets. There is urgent need for the realization that emerging markets are always sensitive to pricing and that this is why the company is facing penetration challenge due to its high-pricing strategy.

Stock strength

Cisco Systems, Inc. (NASDAQ:CSCO) has refused to go down even as completion grows intense. The stock swings back and forth depending on the news coming from the company. But even in this condition, very little value has been lost over the past 12 months in stock price. This simply suggests that the company has a lot of potentials to drive more value into the pockets of investors.

For example, Cisco Systems, Inc. (NASDAQ:CSCO) holds a “buy” rating from the street due to its strengths such as revenue growth, reasonable debt levels, good operating cash flow, attractive valuation levels, expanding profit margins and solid financial position.

By most measures, these strengths outweigh any existing weaknesses which the company might be facing. Particularly, the company’s weakness can be seen in poor net income growth.

Revenue estimates

As market conditions change, Cisco Systems, Inc. (NASDAQ:CSCO) has had to adjust its long-term revenue growth. Over the past 12 months, the company has adjusted this column down by about 33 percent. These downward adjustments are largely due to let down in emerging markets from where big growth was expected.

Emerging markets

Emerging markets are key to the growth of Cisco Systems, Inc. (NASDAQ:CSCO) in networking equipment and software. The company’s performance in these markets has contributed about 20 percent of its total revenue over the last few years. The company was looking to benefit more from these markets with expected growth of 7 – 13 percent in the long-term.

However, these hopes are challenges by inconsistent nature of the emerging markets, unpredictability of short-term business and heightened competition in emerging economies.

Even more hurting for Cisco Systems, Inc. (NASDAQ:CSCO) in emerging economies is that it has decided to keep of low margin business. This habit is likely to lead to more problems in these markets considering that emerging markets are highly price sensitive. In any case, most providers of networking solutions competition with Cisco in emerging economies are exploiting low margin condition of the markets to deny Cisco Systems, Inc. (NASDAQ:CSCO) lots of business opportunities.

Change in strategy

Cisco Systems, Inc. (NASDAQ:CSCO) has all the resources it needs to continue being the market leader in both developed and emerging economies. The company can crack the password in emerging markets if it can only agree to the low margin deals because this seems to be the nature of emerging economies.

There is no reason why Cisco Systems, Inc. (NASDAQ:CSCO) should not realize higher revenue if the management changes their approach to emerging economies.

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