Buy Cisco Systems, Inc. (CSCO)

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Cisco’s challenge going forward will be the continued shift from hardware driven networking to software defined networking (SDN). Hardware based network equipment providers like Cisco need to respond to this threat and Cisco already is. First, Cisco introduced its software based Cisco Cloud Connection Solution and the company is also shopping around for solid acquisitions. Recent buys include a UK based provider of mobile platform technology, Ubiquisys, as well as the late 2012 acquisition of SDN provider, Cariden. Cisco Systems, Inc. (NASDAQ:CSCO) recently joined IBM Inc. in supporting the OpenDaylight project, an open source framework for advancing software defined networks.

Final Thoughts

Cisco’s low P/E makes it an attractive prospect for value investors. The dividend yield adds icing on the cake. The company’s share price performance over the last year is another reason to like Cisco. Slow and steady often wins the race and Cisco’s share price is up 8.06% year over year and 8% year to date. In contrast, Ericsson has jumped 25.61% year over year and 21.74% year to date. The high P/E and the price action may cause some investors to shy away, but Ericcson is aggressively planning for future growth, having recently acquired Microsoft’s IPTV (Internet Protocol TV) platform, Mediaroom.

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