|Bid||64.00 x 800|
|Ask||65.00 x 900|
|Day's Range||63.78 - 64.89|
|52 Week Range||32.98 - 67.49|
|Beta (3Y Monthly)||1.47|
|PE Ratio (TTM)||122.31|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
(Bloomberg) -- Cisco Systems Inc. plummeted the most in almost six years after the company gave a lackluster sales forecast, indicating the U.S.-China trade dispute and a slowing global economy are leading customers to delay updates of their computer networks.Chief Executive Officer Chuck Robbins is trying to turn Cisco into more of a software and services company, but the transformation is being stymied by the trade war and its impact on corporate spending. The company still gets the majority of sales from machines that are the backbone of the internet, making it an economic bellwether. The CEO said some customers are showing more caution because of escalating trade tensions.“They’re just hedging their bets relative to some resolution on this stuff,” Robbins said. “We did see in July some slight early indications of some macro shifts that we didn’t see in the prior quarter.” Robbins said Wednesday.Cisco shares declined 8.6% to $46.25 at the close in New York, the biggest single-day fall since November 2013. It was the worst performer Thursday on the Dow Jones Industrial Average. Even with Thursday’s drop, the stock has gained 6.7% this year.Cisco said sales in the fiscal first quarter will be flat to an increase of as much as 2% from the period a year earlier. That implies revenue of as little as $12.9 billion, compared with analysts’ average estimate of $13.4 billion. Adjusted profit will be 80 cents to 82 cents a share, the San Jose, California-based company said Wednesday in a statement.In the fourth quarter, which ended July 27, total orders were unchanged. Emerging markets bookings were down and the Asia Pacific region saw a decline of 8%, Chief Financial Officer Kelly Kramer said on a conference call with analysts.While Cisco gets less than 3% of revenue from China, business there has dropped “dramatically,” Robbins said. State-owned enterprises and some Chinese telecom providers that had used small amounts of Cisco machinery are not interested in bids from the company amid the current trade tension, he explained.Fiscal fourth-quarter net income fell to $2.2 billion, or 51 cents a share, from $3.8 billion, or 81 cents, a year earlier. Revenue was $13.4 billion, a seventh quarterly expansion. Excluding certain items, Cisco posted profit of 83 cents a share, compared with the average analyst estimate of 82 cents, according to data compiled by Bloomberg.Orders in the Americas and Europe increased, albeit slowly. Bookings from service providers, such as telecom and cable-TV operators, slumped 21%, while government and commercial customers sought more gear than they had a year earlier, Cisco said.Cable companies aren’t buying new equipment -- instead, they’re trying to wring as much life as they can out of their existing gear, Robbins said in an interview. The phone-service providers are spending on consumer 5G, or fifth generation, networks. These customers will shift investment to Cisco’s gear, which lives in their data centers, when they’re deploying business services on those new networks that require greater traffic management, he said.Robbins said he sees little need for concern that the overall economy is about to drop.“There’s a lot of geopolitical dynamics, and I’ve said multiple times that I’ve been shocked how well the macro has held up,” he said. “In most of the world it wasn’t terrible at all. I would not make it a broad-based assertion yet.”In the recent period, Cisco’s hardware business generated sales of $7.88 billion, a gain of 6%. Applications, its software unit, was up 11% at $1.49 billion and security revenue jumped 14% to $714 million.Cisco is the biggest maker of routers, switches and other gear used to connect computers. The company gets a tiny percentage of sales from China, where it’s been largely locked out of the market. Almost 60% of revenue comes from the Americas region.Under Robbins, Cisco has made a string of acquisitions to build a software and services business. Earlier this month, it announced plans to buy closely held Voicea, a maker of software that provides real-time transcription and voice search capabilities.Cisco is still buying hardware companies, too. In July, it agreed to acquire Acacia Communications Inc. for about $2.6 billion, gaining chips and machines that help translate optical signals into electronic data.(Updates with share price in the fourth paragraph.)To contact the reporter on this story: Ian King in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Alistair Barr, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Cisco (CSCO) is benefiting from its expanding footprint in the rapidly growing security market. Further, partnerships and accretive acquisitions will boost its revenue base.
Acacia Communications, Inc. (ACIA) delivered earnings and revenue surprises of 16.67% and 2.30%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?
Most Cisco Systems (NASDAQ:CSCO) shareholders apparently cheered Cisco's acquisition of optical communication technology company Acacia Communications (NASDAQ:ACIA), as the already-overbought Cisco stock rose following the announcement of the deal. It's possible that many of those investors, however, don't fully understand the significance of the transaction.Source: Shutterstock The networking giant will bolster the breadth and depth of its fiber optic tech portfolio by officially making Acacia, which was already a CSCO supplier, part of the Cisco family.It's a development that merits a look beyond simple explanations, though, even for the non-tech layperson who happens to hold Cisco stock. Although the deal won't immediately boost Cisco stock price, the transaction sets the stage for Cisco stock to rally beginning in 2020.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Another Smart DealCisco CEO Chuck Robbins has made clear since he took the helm in 2015 that Cisco would use what's now a $35 billion war chest to invest in bolt-on businesses. And that's what he's been doing. Shortly before the $2.6 billion offer was made to Acacia, Cisco announced its intent to acquire Sentryo. In January, it bought Singularity Networks. In 2018, Cisco acquired six companies.The Acacia deal is another big step down a mostly-underestimated path that Cisco is already traveling, though. With Acacia, CSCO now has something it can offer network operators that will have to use fiber optic solutions to handle the massive data loads which the advent of 5G connections will create.In short, Acacia's wares, known as coherent optical interconnect products, facilitate so-called long-haul optical communications that can travel thousands of miles.Acacia's products are the perfect complement to Cisco's large-scale networking portfolio, though they also bolster the "inside the data center" optical networking technology that CSCO obtained through last year's acquisition of Luxtera. Coherent Technology Is the Inevitable FutureCoherent technology is a vague term used to describe using light-based signals to communicate at 100G speeds (and beyond) for long, long distances.Cisco didn't invent it, exactly. Arguably, it was smaller rival Ciena (NYSE:CIEN) that laid the ground work for long-distance fiber optic communications a decade ago. Ciena hasn't been able to commercialize the technology the way Cisco appears it will be able to, however.5G wireless speeds are set to effectively be three to four times faster than 4G connections, though in practical theory, they could be ten or twenty times faster. That makes 5G a potential alternative to wire-based internet communications.For perspective, Cisco forecasts that global coherent traffic will reach 13.2 exabytes per day in 2022, up from 4.1 exabytes per day in 2017. 5G devices will spur much of that new traffic.The catch is that radio signals can only travel so far, and cross-country communications can't be handled by radio. They have to be carried by a physical line at least some of the way. Fiber optics, or optical networking, are the only way to do that. And to make optical networking feasible, many 100G-capable fiber optic lines will have to be laid down. That, of course, is where Cisco's coherent technology will come in. Looking Ahead for Cisco StockThe coherent optical technology hardware market is expected to be worth $70 billion by 2026, according to Acumen Research and Consulting. That's more revenue than Cisco produced over the course of the past four reported quarters, pointing to a tremendous growth opportunity and a huge potential positive catalyst for Cisco stock.Current and prospective owners of Cisco stock may not want to celebrate just yet, however. Other players are gunning for a piece of that market. The aforementioned Ciena is one of them. NeoPhotonics (NYSE:NPTN) is another. Infinera (NASDAQ:INFN) is still another.Only a handful of players can offer a soup-to-nuts solution, though.Jimmy Yu, vice president and industry analyst for the Optical Transport program with Dell'Oro Group, explains: "Once Cisco concludes this acquisition, four optical system vendors will have in-house capability for developing and producing the key components for coherent line cards. The four system vendors are Cisco, Ciena, Huawei, and Infinera."Of the four, Cisco stands out as the one most operators are willing to bet will be around and available into the future, with the least risk of running into political turbulence. That's good news for CSCO and Cisco stock price.The 5G-driven growth of Cisco's coherent technology arm may not materialize until next year, but given its potential, Cisco stock could plausibly start to reflect that opportunity this year.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks Under $10 * 8 Monthly Dividend Stocks to Buy for Consistent Income * 7 Disruptive Biotech Stocks to Buy for 2025 The post What the Acacia Acquisition Means for Cisco Stock appeared first on InvestorPlace.
Acacia Communications, Inc. (ACIA) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
With Q2 earnings season ramping up, here's a look at 16 stocks, including Acacia, StoneCo, Splunk, Kirkland Lake Gold, and Paylocity, expecting 50%-550% EPS gains.
Telecom gear supplier Ciena is the IBD Stock Of The Day. Ciena is trading near an 11-year high after the Cisco Systems acquisition of Acacia Communications raised the profile of its peers.
The New England region grabbed 8.9 percent of second quarter deal count and 8.9 percent of second quarter deal value, according to a new report.
The index endured a turbulent week but gained after the Fed Chair indicated that a rate was likely later this month.
Analysts are somewhat split on how much sense the deal makes. It would be Cisco's second-biggest under CEO Chuck Robbins.
Cisco Systems has decided to acquire its supplier Acacia Communications for ~$2.6 billion in cash. How will each company benefit?
Shares in Cisco Systems (NASDAQ:CSCO) haven't been this hot in 20 years. Back then, Cisco briefly reigned as the world's most valuable company, its switches and routers being at the heart of this new thing called "the internet."Source: Shutterstock Those days are gone, along with the sweet, sad song of your dial-up modem. But Cisco stock is up 33% so far in 2019. The bull run continued July 10 as analysts applauded its $2.6 billion buyout of Acacia Communications (NASDAQ:ACIA), due to close at the back end of a fiscal year that begins in August.Acacia was already supplying optical interconnects for Cisco switches. Buying the company gives Cisco intellectual property it can use to keep selling gear to both the Cloud Czars and their retinue, the co-location sites, telcos and scaled enterprises that are constantly demanding more speed from their connections.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut is this an offensive or defensive move? Fighting HuaweiOf all the large U.S. tech companies, none is as much in the crosshairs of China's Huawei as Cisco.Huawei was the main target for President Donald Trump in the China trade war, but this week's relaxation of those sanctions means its lower-cost networking gear is back in the frame, at least for international buyers. * 7 Retail Stocks to Buy for the Second Half of 2019 The companies I call the Cloud Czars -- Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB) -- are always focused on cutting costs in their data centers, where capital spending now costs $100 billion per year.Low-cost, commodity hardware built with open-source standards always has an advantage in this market, against any proprietary solution. Huawei sales have risen nearly 10-fold in the last decade.As the relationship between Huawei, with its low costs, and U.S. companies thaws, Cisco needs control of patented technology to stay relevant. The result has been a buying spree. It bought Duo Security last year for $2.35 billion in cash and stock; then chip maker Luxtera for $660 million in cash and assumed equity; and, now, Acacia. Cisco Stock Is Not CheapIndustry analysts and market analysts all approve this strategy, which is why Cisco is a hot stock.At around $57 per share, Cisco has a market cap of $244 billion. By some metrics, the price is still reasonable -- the trailing price-to-earnings ratio is under 20, and it offers a 35-cent quarterly dividend yielding 2.5%. But until this year, Cisco was considered a dividend aristocrat, not a growth play.As one analyst (OK, it was me) wrote last year, "boring can be beautiful." Even in May I called Cisco a conservative tech investment, suggesting you just put it in your pocket and let time work its magic.That article was published soon after I took my own advice and stuck some Cisco in my own retirement account, at about $51.40 according to my bookie. (OK, it was my broker.) I'm up 10% in three months, plus there's that dividend, still better than the 2.07% yield on a 10-year government bond. The Bottom LineCisco is still Cisco. It's not BeyondMeat (NASDAQ:BYND). This is not 1999. My red beard is not coming back.The moves CSCO stock has made in the last year, and the moves it will continue to make, are primarily defensive in nature. Cisco CEO Chuck Robbins knows that, as hardware becomes software, maintaining a proprietary edge against low-cost solutions remains essential.That's going to cost money. Cisco is spending money. It had nearly $25 billion in cash and short-term securities in the bank as of March. Acacia represents just over 10% of that cash, a small price to pay for protecting its exposed flank.Just be aware. That flank remains exposed.Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O'Flynn and the Bear, available now at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, AMZN, AAPL, and CSCO. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post Cisco Stock Investors Party Like Itas 1999. Itas Not. appeared first on InvestorPlace.
Bank of America's Tal Liani maintained a Buy rating on Cisco with an unchanged $62 price target. Cisco offered to acquire Acacia for $2.6 billion in what looks like a "defensive and offensive move," Liani said in a Wednesday note. On the offensive side, the deal will expand Cisco's switches and routers through adding new use cases and target markets, the analyst said.
Cisco (CSCO) is benefiting from its expanding footprint in the rapidly growing security market. Also, partnerships and acquisitions will boost the company's revenue base.
Jefferies analyst George Notter wrote Wednesday that Ciena Corp. looks to be the "primary beneficiary" of market-share consolidation in the optical-systems industry, following Cisco Systems Inc.'s announcement that it would be purchasing Acacia Communications Inc. in a deal valued at $2.6 billion. Notter wrote that optical innovation is happening more rapidly, requiring larger research-and-development budgets. "As such, smaller optical suppliers will increasingly struggle to keep up with vendors such as Ciena and Nokia which have sizable R&D budgets, own their core technology, and operate in scaled business models," he wrote. "We view Ciena as having reached an 'escape velocity' relative to the rest of the industry." Notter doesn't expect that Ciena is worried about the Acacia deal because Ciena's roadmap looks to be ahead of Acacia's by at least a year. Ciena shares have gained 28% so far this year, while the S&P 500 has risen 19%.
Cisco's $2.6 billion deal for Acacia Communications will leave Ciena the "prime beneficiary" of optical-systems industry consolidation, Jefferies analyst George Notter contends.
(Bloomberg) -- Cisco Systems Inc. agreed to buy Acacia Communications Inc. for about $2.6 billion, the technology giant’s latest acquisition as it seeks technologies to meet customer demand for more robust networks.The San Jose-based company will pay $70 a share, a 46% premium to Acacia’s closing price on Monday, the companies said in a statement Tuesday. The purchase price is about $2.6 billion on a fully diluted basis net of cash and marketable securities, and the deal is expected to close in the second half of Cisco’s fiscal 2020 year.Cisco, whose equipment makes up the backbone of the internet and corporate networks, has recently rekindled growth by revamping existing products and adding new software and services under a corporate makeover by Chief Executive Officer Chuck Robbins. In May, the company gave a bullish sales and profit forecast for the current period, a sign that corporations continue to spend on computer networks despite the trade dispute between China and the U.S.“Bringing Acacia’s high-speed digital signal processing (DSP) technologies in-house allows Cisco to better compete with peers, such as Ciena,” said Woo Jin Ho, senior technology analyst at Bloomberg Intelligence.Acacia’s stock surged 35% to $64.91 Tuesday in New York, while Cisco shares were little changed at $56.34. Cisco’s stock had climbed 30% this year through Monday’s close and has doubled in the past three years. Acacia went public in May 2016 at $23 a share and its stock surged that year to more than $120.Cisco’s latest acquisition makes chips and machines that help translate optical signals into electronic data. Acacia’s products are used to speed the flow of information around data centers and telecommunication networks.The new capabilities may help Cisco make more headway selling gear to hyperscale data center owners such as Amazon.com Inc. and Alphabet Inc.’s Google, the company said in a presentation. That’s an area where Cisco has struggled to win sales. If it doesn’t grab share in the market for optical systems, the expense of developing the components may prove burdensome and force it to keep selling to Acacia’s existing customers, many of whom are its competitors, according to Dell’Oro Group analyst Jimmy Yu.During a conference call after the deal’s announcement, analysts questioned whether that will be possible as those competitors may balk at buying from Cisco. Acacia’s customers include Nokia Oyj, Huawei Technologies Co. and ZTE Corp., and Cisco accounts for about 18% of its revenue, according to Bloomberg’s supply chain analysis.Bill Gartner, the head of Cisco’s optical business, said the deal allows the companies to more closely integrate their technologies and offer customers simpler solutions.“We feel like having this technology in-house is the best way to do that,” Gartner said.Under Robbins, Cisco has made a series of acquisitions aimed at bringing in software and services that will ease the company’s dependence on hardware. He’s trying to build more predictable, recurring revenue by offering customers the ability to remotely manage and monitor their networks in order to make them more efficient and secure.Robbins has said that transformation will take time as many of the new offerings require customers to shift to newer hardware that will support advanced functions and services.Cisco’s status as the biggest maker of routers, switches and other gear for connecting computers means its earnings are seen as a broad indicator of corporate spending plans. The company gets only a tiny percentage of sales from China, where it’s been largely locked out of the market, and in one way may be a beneficiary of the ongoing trade dispute, which includes U.S. government attempts to block purchases of equipment from one of its biggest rivals, Huawei Technologies Co. Still, if business spending is hindered by an overall economic slowdown caused by trade uncertainty, Cisco’s sales could feel a hit, analysts have said.(Updates with description of Acacia’s technology in the sixth paragraph.)\--With assistance from Peter Elstrom.To contact the reporter on this story: Ian King in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Peter Elstrom at email@example.com, Molly Schuetz, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.