How Ya Like Cisco Now?
It’s been a tough year or so for Cisco Systems, its shareholders and its employees. A year ago, the company had hit some “air pockets,” as CEO John Chambers put it. Shares dropped the next day from north of $24 a share to south of $20.
By February, the temporary turbulence appeared more permanent. Chambers said that Cisco had entered a “period of transition.” Some transition. First came the unceremonious execution of the Flip videocamera business, a decision which has never — even months later — been fully explained.
Then came the job cuts — 6,500 from Cisco itself; another 5,000 and change were transferred to the Taiwanese manufacturing giant Foxconn. Cisco is now a much lighter operation, yet still on its way to cutting $1 billion in operating expenses.
The results so far speak for themselves. Cisco’s results packed a serious wallop to the expectations of Wall Street analysts, who are falling all over themselves today to upgrade Cisco’s shares.
“An underappreciated turnaround story,” was the phrase Shaw Wu of Sterne Agee chose to describe Cisco in a note to clients today. “Showing tangible evidence that execution has improved,” wrote Brian Marshall for ISI Group. Brian Modoff of Deutsche Bank upgraded Cisco to “buy,” and raised his target price to $22 from $17. So did John Slack at Citigroup, and Todd Koffman at Raymond James. Cisco appears to be “on the right track,” wrote Ittai Kidron of Oppenheimer & Co.
Shares are surging accordingly. As of 10:35 am ET, they’re up by $1, or more than 6 percent, to $18.61. That’s not a full recovery to where it was before this whole drama began a year ago, and yes, it has been painful to get to this point. But it’s a start. The question now is whether Cisco can make it stick.
As I listened to the conference call with analysts yesterday — and watched the stock climb this morning — I kept hearing in my head the song “How You Like Me Now?” by the Heavy. This morning, I thought I’d share it. Enjoy: