“Data in motion presents a major monetization opportunity for service providers. As this data traverses access, core and cloud networks, the close orchestration between intelligent infrastructure and software enables our customers to optimize network resources through granular visibility at all levels,” said Kelly Ahuja, Cisco Systems, Inc. (NASDAQ:CSCO)’s general manager, Service Provider Mobility Group.
It is clear that the mobile internet solutions are among Cisco’s products expected to make big impact in 2013. Fortunately, this product line is proving popular over time, and gaining a head start over its rivals will prove profitable to Cisco in both the short and long run.
When we recall the performance of the wireless, data center, and other relevant categories in Cisco’s recent earning reports, it is clear the company has been improved in comparison to its 2011 reports, so it can be said that the company is operating at an efficient level.
Competition
Cisco Systems, Inc. (NASDAQ:CSCO) is in a better position than its closest competitors when looking at gross margins and earnings per share. Cisco has a gross margin of 60.70%, compared with 30.34% for Alcatel Lucent SA (ADR) (NYSE:ALU) and 24.19% for Hewlett-Packard Company (NYSE:HPQ), and earnings per share of $1.74, compared with -$0.79 for Alcatel-Lucent and -$6.41 for Hewlett-Packard.
Cisco is also looked at more favorably than these competitors in terms of market position and stock growth. Alcatel-Lucent’s Instant Convergent Charging Suite will provide competition to Cisco’s Quantum products, but will have limitations. The Instant Convergent Charging suit allows users to manage voice, data, video, content and commerce services. Users can process up-to-the-minute revenue streams in order to monetize network bandwidth. However, Cisco’s products are designed to enable wireless service providers to better analyze and monetize data in motion in 3G, 4G and WiFi networks, resulting in lower total cost of ownership when compared to Alcatel-Lucent’s product.
Looking ahead, Alcatel-Lucent’s recent launch of OpenTouch, a cloud-based enterprise for smartphones, tablets and other mobile devices, should keep Cisco Systems, Inc. (NASDAQ:CSCO) on edge. This new platform will make it easier for businesses to transition to the cloud in order to meet the growing demand for communications services geared toward a mobile workforce. While Alcatel-Lucent is a formidable competitor to Cisco, it is facing major cost cutting issues and has been lacking in revenue growth. In its latest earnings report, Alcatel Lucent reported a 3.8% decline in revenue year-on-year. Investors should use caution when considering an investment in Alcatel-Lucent.
Hewlett-Packard’s Autonomy analytics software challenges Cisco’s Quantum Analytics. But it only parses large amounts of data for insight into businesses, while Cisco’s effort is part of a program to monetize data in motion and enhance the ‘Internet of Everything.’ HP Autonomy recently received a boost after Maricopa Integrated Health System chose the company’s Data Protector and StoreOnce products in order to help meet its needs for disaster recovery and data protection. The Maricopa Integrated Health System is one of many health systems that is burdened by a massive volume of data.
Hewlett-Packard reported first quarter results recently, with sales falling 6% to $28.4 billion, which beat analyst estimates of $27.8 billion. Sales in five of its major business segments fell by at least 4%. Revenue from the company’s Financial Services segment rose 1% to $957 million. I see more negatives than positives for Hewlett-Packard in the coming months. Investors should watch closely for new developments in its strategy and business segments.
Conclusion
Looking at the previous performance of Cisco’s mobile internet solutions, the bright forecast for the sector, and the improving margins, I can say that Cisco Systems, Inc. (NASDAQ:CSCO)’s new product will improve price multiples. Conclusively, the stock is a good buy at the moment.
The article Cisco Is Ready To Ride The Mobile Market Higher originally appeared on Fool.com and is written by Maxwell Fisher.
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