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Investors Should Watch Cisco's Transformation

We expect the networking giant can turn itself into a software- and services-focused firm while delivering on its commitment to returning cash to shareholders.


Mark Cash: Within the networking technology sector, we believe that narrow-moat Cisco warrants investor attention. This stable moat trend company is attractive because of its shareholder return policy, free cash flow generation, and we expect Cisco to be successful in its transformation into a software- and services-focused firm.

Cisco remains the dominant supplier of switches, routers, and other networking gear for IT professionals. The market trend of networking professionals moving workloads to clouds is a threat to networking hardware providers like Cisco. However, the company is focused on high-growth areas of software-defined networking, analytics, wireless, and security solutions.

Mark Cash does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.