Cisco Systems, Inc, designs, manufactures, and sells internet protocol (IP) and other products related to the communication technology industry. Its products (covering routing and switching) are part of the today’s industrial backbone of the globally interlinked society. Cisco is a leader in its field and gathers about 70 to 80 % in key market segments. Its customers range from large telecommunication companies to small and medium size enterprises. The company has a product range, though limited, for household.
The traditional business, which the company started in 1984, of switchers and routers still provides about half of Cisco’s revenue. The newer product offering covers services and software for datacenters with IOT application, enterprise wireless application and security models. These newer product brand should drive the company’s growth strategy for income and market share for the years ahead as the router and switch business is a fully commoditized market with little margin and no growth potential. The company’s FCF is at 7 % presently is attractive in the present low-interest-rate environment. Next 3 to 5 years earnings growth is expected to be around 5 %, while operating earnings growth and sales growth is at 7 % respectively 8 % p.a.