What’s the takeaway form Cisco’s disappointing quarter? While investors obviously want to sell Cisco, they should not associate many of the company’s peers with its poor perfomance.
Most certainly there was a time when Cisco was a bellwether; other stocks traded higher or lower based on how CSCO was doing at any given time. That changed on Tuesday. Cramer thinks the company now is just too big to be a barometer for important trends in each of its segments.
Cisco ran up going into the quarter but took a mighty haircut after reporting inline earnings and a lower-than-expected for the next quarter. This marked the second quarter in a row the company’s had guided lower, and the Street punished the stock 17-percent’s worth in after-hours trading. But the problem was that investors punished much of the tech sector, too.
Look at these differences between Cisco and other tech names, though: Cisco is predicting 3-percent to 5-percent growth next quarter, while Oracle expects 39 percent to 43 percent. At the same time, Juniper Networks is looking for 16 percent to 18 percent, F5 Networks 40 percent to 41 percent, and Citrix Systems 10 percent to 13 percent. And Cramer said he saw nothing in Cisco’s report to doubt these other companies. Plus, even in areas where Cisco was having trouble these competitors were doing well, including in Europe and the cable business.
If investors want to play any of Cisco’s segments, and plenty of them did do well this past quarter despite the overall negative numbers, they are better off going with something different. For Enterprise, Cramer likes Oracle. For data-center sales, there’s EMC . In networking equipment, they can consider Juniper. And finally, he recommended F5.
“Cisco’s high-profile meltdown is not a reason to put all things technology in the ‘Sell Block,’” Cramer said. Instead it’s “an opportunity to buy, not sell, Oracle, EMC, Juniper and F-Five, the names that were down in sympathy with this newfound devil.”
When this story published, Cramer’s charitable trust owned Cisco Systems and EMC.
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