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Cisco, Facebook Team Up

Zacks Equity Research

Cisco Systems Inc (CSCO) recently entered into a partnership with Facebook (FB) to provide customers the opportunity to connect to wireless networks at different merchants by simply logging in to their respective Facebook accounts. This service is called Cisco Connected Mobile Experience (:CMX) with Facebook Wi-fi.

The partnership will help retailers to serve their customers better, enabling them to understand demographic details. It will also provide more opportunities to businesses to connect with their customers by providing more likes and check-ins to the businesses’ Facebook pages. Additionally, shoppers will get free access to Wi-fi alongwith other lucrative offers.

With the CMX for Facebook Wi-fi feature enabled on a phone, a customer joining a business’ Wi-fi network will be directed to a Facebook page to check in. From there, the customers will be redirected to the business’ Facebook page where the requisite information about the business is available.

This CMX feature is expected to provide personalized mobile services to consumers. This Wi-fi venture is not funded by Facebook and the cost of network equipment and broadband will have to be borne by the retailers.

This deal will not only prove beneficial for Cisco but will also enable Facebook to develop closer relationships with merchants by providing them essential demographic data to improve services. Better services, in turn, would ensure customer retention and also help in acquiring new customers, thereby enhancing profits.

With this effort, Facebook now joins its competitor Google Inc (GOOG) in helping users get direct access to the Internet. Recently, Google too had declared its intentions of bringing in free wireless Internet connectivity to approximately 7000 Starbucks (SBUX) cafes across the United States. Cisco, on the other hand, appears to be focusing on selling its network equipment.

Cisco Systems, Inc. is the worldwide leader in networking for the Internet. Cisco Systems reported fourth quarter 2013 earnings of 49 cents a share, beating the Zacks Consensus Estimate of 47 cents on higher revenues and lower-than-expected operating expenses. Revenues increased 6.0% year over year and 1.6% sequentially to $12.4 billion.

Cisco’s strategy of pursuing growth opportunities in international markets has helped in the delivery of positive results. Despite facing intense competition from various small players, it continues to remain strong in its domain.

Currently, Cisco has a Zacks Rank # 3 (Hold).

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