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Categories: Cisco

@Cisco is very slowly (but surely) shifting to a recurring revenue model driven by subscription-based software solutions. As a result, financial performance is likely to become less lumpy along with stock price behavior, in my view. The market is finally perceiving CSCO to be a bit of a safer play, which to me justifies the valuation expansion. Many of us have grown accustomed to thinking of Cisco (CSCO) as a maker of expensive, large “boxes” that forward and route data across public and private networks. While still true to a great extent, this is slowly changing, to the benefit of investors – whether they are paying close attention to the transition or not. Today, Cisco is very slowly (but surely) becoming a subscription-based tech provider that relies increasingly on software solutions to the detriment of expensive hardware. And the new business model, I believe, is likely to cause the company’s stock to behave differently from how it has in the past several years.

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