Cisco (CSCO)

Very much dependent on what is going on in the macro environment and with margin compression driven by more competition in that lower level of networking equipment, which is switching and routing. Margins are very high and have been under pressure from companies like Huawei and 3Com. At the same time the macro environment, in terms of overall sales to enterprise, has really slowed. There is now a potential risk from the transition to new technology OpenFlow and Software Defined Networking (SDN), which could easily become a big factor in the next 3-5 years and could have the effect of further commoditizing their technology. Still doing good things in storage area and unified storage stuff. (See Top Picks.)

Sold his holdings a couple of years ago around this level. It isn’t the company it once was. There were years and years when they looked to grow earnings 12%-17% and now they are looking at 5%-7%. Doesn’t deserve the valuation that it did in the past. Slow grower.

This has basically been languishing for 12 years. Very important business and very integral to a lot of different companies and technology platforms globally. They have had a massive crunching down of the PE multiple, which is a major enemy of investors. Doesn’t see any major reason why it should suddenly surge. Would recommend other technology in order to get more gain. 1.9% yield.