Cisco (CSCO) – A Gift from the Markets

February 10, 2011

I have over the last few months been forming the conclusion that Cisco offers an attractive potential return situation based on its earnings yield from operations. The company, with a market cap of $105 billion, is sitting on $35 billion in excess bonds because the CEO is unwilling to repatriate its overseas profits under the current tax scheme. Take those away, and we find that Cisco’s core operations produce some very juicy returns.

Last night, Cisco reported reasonable earnings and announced that its future growth is not at an end. Regular readers will know what I think about future growth, but Cisco is reasonably priced without it and a screaming buy with it. The market inexplicably punished Cisco with a 13% decline in share prices today, which I would describe as nothing short of a gift for new purchasers.

I have my full views on Cisco on my seekingalpha page at Do please come by.

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