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Networking - Tuesday, June 17, 2008

Cisco Stock Is A Good Friend of Our Portfolio

With the economy looking uncertain and many investors looking to lock-up large amounts of their portfolios in "stable staples", technology stocks may seem like a leap of faith to those who are risk adverse. In these uncertain economic times, the risk associated with Cisco (NASDAQ:CSCO) and their human network is minimal.

What impresses tech:stocker the most about Cisco is its ability to know when to make strategic acquisitions and when to build it themselves. Buying Iron Port for $830M in cash and stock may have seemed like a lot of money to many critics but in hindsight it was a steal and little more than weekend spending money for John Chambers. Valid enterprise security has the potential to save Global 2000 companies millions of dollars in lost man-hours each year.

Equally impressive is their Enterprise TV platform and their decision to build it within the company instead of over paying for the well-publicized Veodia. Rising costs associated with travel will help Cisco quickly sell to the Global 2000 and even smaller companies. And the video surveillance component should find its way to smaller business that need to need to store their footage for legal reasons, let alone casinos who want to review the footage from their thousands of cameras.

Knowing when to buy and when to develop within makes Cisco look like they are in a position to not only survive the many influences that are affecting the U.S. economy, they could even emerge a stronger company. Cisco should close the year around $31 per share which would give everyone a nice little profit and endow Mr. Chambers with a little extra capital to develop a new technology or acquire one. Long live the human network and its ability to become a staple in a variety of investment strategies.