Cisco has had a long history of M&A and I continue to maintain that it would serve its growth interest if it were to acquire a company such as Brocade Communications (BRCD). The company has been pretty open about the possibility of more acquisitions, but such a move is unlikely absent a showing of some strategic fundamental improvements.
As far as numbers for the quarter I expect the company to report earnings of 46 cents per share with gross margins arriving at 28%.
Though Cisco is moving in the right direction, it has an uphill battle to convince a market that rarely forgives and certainly never forgets. The company has already demonstrated that it deserves to be back in the discussion of technology companies that consistently deliver solid market beating performances.
From an investment standpoint, the stock is trading at a multiple (14) that has not factored in the company's true future potential. Investors should consider adding Cisco at current levels ahead of earnings and continue to accumulate as its recent performances suggest that the stock will be trading at $30 in a relatively short period of time.
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