NEW YORK (TheStreet) -- Cisco Systems (CSCO) - Get Cisco Systems, Inc. Report shares are down 0.9% to $27.52 in trading on Friday after the networking based protocol device manufacturer sued rival Arista Networks (ANET) - Get Arista Networks, Inc. Report over claims that the company infringed on several of Cisco's patents.
"The heart of our action regards Arista's deliberate inclusion in its products of 12 discrete and important Cisco features covered by 14 different U.S. patents," said the company's general counsel in a statement today.
In response to the suit, Arista Networks released this statement, "We just became aware of the lawsuit and have not had an opportunity to evaluate the claims in detail. We will certainly be doing so in the coming days. While we have respect for Cisco as a fierce competitor and the dominant player in the market, we are disappointed that they have to resort to litigation rather than simply compete with us in products."
In separate Cisco litigation news, the U.S. Supreme Court said Friday that they will take up a case involving a federal appeals court decision to dismiss a $64 million jury verdict against the company for allegedly infringing on another rival's, Commil USA, patent for wireless technology. The case has been scheduled for March.
TheStreet Ratings team rates CISCO SYSTEMS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CISCO SYSTEMS INC (CSCO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CSCO's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, CSCO's share price has jumped by 29.32%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CSCO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The gross profit margin for CISCO SYSTEMS INC is rather high; currently it is at 65.71%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 14.92% trails the industry average.
- Despite currently having a low debt-to-equity ratio of 0.37, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.03 is very high and demonstrates very strong liquidity.
- You can view the full analysis from the report here: CSCO Ratings Report