Cisco Systems, Inc. (NASDAQ:CSCO) operates as a provider of networking solutions which are based on Internet Protocol. It provides of various products which are geared to offer solutions required for both the communication and IT sectors. The business model is carried out under five segments which include the U.S and Canada, in addition to European markets, Asia Pacific, and the Emerging Markets as well as Japan. Cisco plays a very important role in the IT sector, and as long as it continues providing relevant solutions, its position as a top company isn’t in jeopardy.

6csco

Image is from www.online.wsj.com

CSCO can’t afford to suffer the same fate which befell Hewlett-Packard. Once HP fell behind its competitors in this industry, it has found it very hard trying to catch up. The gap even appears to be widening in some aspects between HP and the other industry players. What is interesting about the whole scenario is the fact that almost all old companies in this sector are struggling while new entrants in the market such as Google and Salesforce.com appear to be doing quiet well. CSCO, Oracle, Microsoft and Intel are all facing major threats to their businesses.

CSCO Must Adapt to the Changing Environment

CSCO has to be awake to the fact that people everywhere prefer to use their mobile devices to get access to the Internet. This is the development which is taking place in the computing world, and CSCO now has to move ahead with the times. Adapting to the new environment is crucial if it is to cement its place at the top of the queue. Moreover, cloud computing is also a new trend in the industry which companies such as Cisco Systems Inc need to be awake to. Some of the products which Cisco makes no longer attract similar high prices like they used to in the past.

CSCO is already making changes in the internal structure of the company. This is designed to create space within the company which would make it easier for modern infrastructure needed for the new developments to thrive. Cisco still enjoys huge sales every year but it has to do more in order not to suffer the same fate which befell HP, which is now considered to be the bearer of the title which makes it worst valued company among the American corporate. If Cisco isn’t careful, it could end up suffering a fate which is not too dissimilar from the one affecting HP.

Cisco’s Sales In Asia Have Dropped

Cisco’s sales in Asia have suffered a dip in the recent quarter. This dip of around 3% has been quite severe, thus threatening CSCO’s stock price and attractiveness. Cheaper competitors have also cropped up thus eating into the market which Cisco needs for its continued survival. Its ability to evolve into a company which is more profitable than it has ever been, hinges on whether it is really capable of coming up with solutions aimed at countering the efforts of the cheap competitors. Cisco operates custom-made equipment which is quite expensive.

We haven’t reached a point where we should start getting out of the CSCO stock. If it manages to weave its way out of the challenges it faces, it will continue attracting increased sales, and seeing a major boost in its revenue.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.