SAN FRANCISCO (MarketWatch) -- Shares of Cisco Systems Inc. (CSCO) fell 1% to $24.54 on Thursday morning after Credit Suisse started coverage of the stock with an underperform rating. In a note to clients, analyst Kulbinder Garcha said the onset of software-defined networking, or SND, will "ultimately threaten the oligopolistic structure and superior levels of profitability seen in switching and routing." While he described Cisco as a "high-quality company" he said it was the most vulnerable in the group to the growth of SDN. "While the company aims to offer an SDN platform, we expect this product evolution to shrink gross margins. While the company aims to grow its services base, this is unlikely to be a sufficient offset," he wrote. He also set neutral ratings for Juniper (JNPR) and Ubiquiti (UBNT), citing risks to those business from SDN. "We expect this last bastion of proprietary IT profits to see gross profit headwinds," he wrote of the group.
-Dan Gallagher; 415-439-6400; AskNewswires@dowjones.com
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09-19-13 1007ETCopyright (c) 2013 Dow Jones & Company, Inc.
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