John Chambers, in a memo to Cisco employees is promising some big changes to repair the technology company’s credibility after a series of disappointing earnings reports, Bloomberg reported today. That could be good news for Cisco shares, which have suffered during the past year.
Despite the disappointments, Cisco is hugely profitable, sits on a $40 billion cash pile and otherwise has strong fundamentals, and now trades at about 13 times trailing earnings, which is historically low for the company.Stronger Cisco sales growth is what the market wants. As a manufacturer with fixed costs, as sales rise profits rise more swiftly. But Chambers hasn’t delivered the growth yet. “You will see Cisco make a number of targeted moves in the coming weeks,” Bloomberg quoted Chambers as promising. With his vow public, that will put pressure on Cisco to perform, and that could help the stock. Charts Pro finds the shares undervalued.
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