Cisco (CSCO)

This is starting to make a bit of resurgence. Part of their product lines have started to come back in. Their market really looked like it was dying and now they seemed to have reinvented themselves in terms of Cloud Services, etc. and the ability to move that traffic. Has added to his holdings recently. Likes the valuation. Very little downside. 2.97% yield.

Has had a pretty good move of late and has initiated a dividend, which is a good thing. Generating free cash flow. Good management. He sees challenges for the tech sector in general.

Has undergone a couple of major changes in the last couple of years. Transitioning from trying to be a growth company which got them in trouble. Throwing off about $6 billion a year of free cash flow. A 3^rd of the market cap is in cash. Just made a big decision to become a dividend payer and jack up the dividend in a huge way. 2.5%-3% current yield. Tons of room for dividend growth. Going to have top line growth in the high single digits and bottom-line growth in the low single digits. A cheap stock.

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.