Wednesday, February 15, 2006

Buy CISCO...for lots of reasons:

Just bought some CISCO stock. I paid $20.60 in £5 per tick (cent),
equivalent to £10,000 worth of stock. Would like to have double this
position but will wait a few days and see how it goes.

This is not a stock I have followed in the past, but I've been thinking
further about the whole telco/internet world. I own BT stock as you know
because I think that when they start delivering video over broadband
later this year, the market will see BTs full potential. Looking more
into WiMax now, I think this could be the technology to devastate the
mobile carries earnings (eg. Vodafone).

If you don't know, WiMax is going to be the next technology after WiFi,
but unlike WiFi which has a radius of ~100-200 feet, WiMax will have a
radius of up to 30 miles, allowing someone like BT to cover the entire
country (and other fixed line operators globally) with broadband
wireless access. New phones are already out that look and feel like
mobiles (that's cellphones to any yanks reading) but connect through
WiFi to use VoIP (Voice over Internet Protocol), so connecting to a
fixed line operators network becomes as easy as using, say Vodafone's
network. And since routing phone calls over the internet costs next to
nothing, this technology could (and I think WILL) destroy Vodafone. So
long BT/short VOD looks an awesome trade.

But I'll come back to that another time, for now I'll just sit long BT,
and to get back to the original point of this note, to get long CISCO as
well, as they essentially deliver the routing technology for the whole
internet. As this VoIP takes off, AND more and more video is delivered
over the internet, it seems there can only be increasing demand for
routing technology (indeed, as CISCO announced at their results last
week, they see growth picking up in this sector). Check the charts, now
looks an excellent entry point, with CISCO having firmly bounced off the
lows, a market cap of ~$120bn, a reasonable P/E of something like 15,
and a great rationale to own it. Target 25% rise in shares within 3


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17 May, 2006 07:29  
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17 May, 2006 12:45  
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17 May, 2006 12:58  

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