Cisco Systems, Inc. (NASDAQ:CSCO) CEO, John Chambers, in a memo detailing the company’s 2015 vision has stated they will be an aggressive participant in the M&A arena. The focus will be on small and midsize software creators. He also mentioned that despite rumors, there is no pressure to break the company up into smaller divisions. They are looking closely at cloud services and internet security software builders. They are intending to remain patient though as current market conditions are creating prices that are over-valuing potential targets.
The statement come as HP is rumored to be in talks to buy Aruba, a networking services provider. The company has done a solid job of cost-cutting and recently had a strong quarter that reflected in a well-received earnings release. This propelled the stock to its current highs, and the company is looking to springboard to even higher highs by capitalizing on the acquisition opportunities in the sector.
Last quarter the company reported strong numbers. The company faces pressure from technology companies that offer software—defined networking equipment as opposed to its hardware offerings of routers and switches. The company still beat estimates across the board with sales and profit hitting all-time highs. Chambers is retiring at the end of the year, and after some tough times has pulled the company back to prominence. Cisco Systems, Inc. (NASDAQ:CSCO) is releasing new equipment that is built to handle the massive growth of internet traffic along with its own software-based networking tools and security services. This is to take some of the pressure of the sales in routers and switches. Gross margins have always been a concern for the company and this move is intended to ease that issue.
The stock is trading at its 52-week high and is showing signs of solid base building as it drifts sideward. As long as momentum stays neutral and it does not violate support at $28.50 this should be considered healthy.