Cisco Systems' analyst meeting went so this well that analysts are expecting the company to start punching back Juniper, HP and other rivals.
On Tuesday, Cisco CEO John Chambers outlined the company’s new targets for the next three years:
- Revenue growth at 5 percent to 7 percent;
- Continuing economic uncertainty;
- Operating margins of 25 percent or show;
- Earnings per share growth at 7 percent to 9 percent.
But the biggest takeaway is that Cisco doesn't plan to pull any punches with its rivals. Stifel Nicolaus analyst Sanjiv Wadhwani said:
The “new” Cisco will be aggressive against competitors. The company seems to be particularly targeting Juniper, who it sees as being the most vulnerable and spread too thin. Cisco pointed out that aggressive stance against competitors does not necessarily translate into aggressive pricing; in fact the company will intensely focus on gross margins going forward with value engineering.
Wedbush analyst Rohit Chopra said:
Cisco takes the gloves off and adopts an aggressive posture versus key rivals. Management reiterated its intention to aggressively protect share and pursue growth several times during the presentation. As part of its strategy, management said it will seek to compete aggressively with Juniper (in switching/routing), HP (in all areas) and Avaya (in switching/routing). While acknowledging that Cisco was playing defense earlier in the year, given its completed restructuring and subsequent stumbles at Juniper and HP, management believes it can compete effectively. Huawei, however, poses a tougher challenge and the company expects to take the fight to China, particularly in the service provider market.
Jefferies analyst George Notter said:
Cisco is talking tougher on their desire to compete more aggressively for deals that – in the past – they might have passed up because of profitability concerns. Of course, HP – with much lower average corporate margins – remains a significant threat in the Switching business going forward.
Add it up and there's going to be one fun battle ahead in the networking market.