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Quick Hits: Cisco Has High Hopes for the Future

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Brief scrutiny of today's headlines.

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Plenty of analysis and commentary will follow Cisco's (CSCO) report, which gives insight on the company's next quarter. When I look at the long-term design activity with its chip vendors and partners, I see promising quarters to come, and agree with the assessments from Barron's Tech Blog:

Chambers is still highly optimistic on the long-term prospects for the carrier market, though. "IP still wins long term," he says. If you look out 3-4 quarters from now, he says, the service provider segment should be growing in the mid-teens again. On the subject of the company's $24 billion cash position, Chambers says the company "absolutely will pay a dividend in the future," but not yet. He says at the company's current valuation, large investors have told him they would rather he buy back stock.

Video over IP is one of the key growth drivers (if not the key driver), for quarters and years to come. When I listen to calls and view the reports from NetLogic Microsystems (NETL), Integrated Device Technology (IDTI), PMC-Sierra (PMCS), LanOptics (EZCH) and Cavium Networks (CAVM), I see stunning, innovative stock sold by Cisco to an incredibly diverse array of products and regions across the globe.

This all takes us from the known to the unknown. There's still an unconstructive debate about the future. Some negativity stems from the U.S. and the global economy. However, when I look at what's happening with my bandwidth thesis, I feel confident that these muted quarters for Cisco will be fairly short-lived and the improved quarters in the future will look better than the company's good quarters in 2006 or 2007.

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No positions in stocks mentioned.

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