Cisco Systems Inc (CSCO): Gappy Charts and Bearish

 

Reuters just reported that Cisco (CSCO) will have a sales miss for this quarter with more jobs cuts expected.

The key points to note for Cisco is as follows:

1. Cisco’s core businesses is UNDER THREAT.

  • On the low end, competitors comes in the form of Netgear (NTGR), despite the fact that it owns Linksys.
  • On the high end, there’s Huawei from China.

In other words, there is very little room for growth in its traditional stronghold.

2. Transitional Period

Much has been said about its transition. While Cisco is pretty much cash rich, with little debt, there is no guaranteed that the transition will see light.

Just not too long ago, the newly acquired FLIP was dumped.

Traditionally, Cisco is used to selling hardware (routers, switches etc). The transition may mean more services and that does requires a change in approach.

3. Ichimoku Chart for CISCO (CSCO)

Nonetheless, we can see from the Ichimoku chart above, CSCO has at least 4 gap down May 2010 when it break the kumo support.

The trend is clearly bearish. With more cost cutting expected, I won’t be surprised if it can touch $15 or even $12 if the overall market turns bad.

 

Palm Inc. (NASDAQ:PALM), Huawei : What it will mean for Huawei?

By now, most sites was already highlighting about Huawei as a potential buyer for Palm Inc.

Many sites have also discussed the various advantage if Company XYZ acquires Palm.

That push me to think a little bit more about Huawei.

So far, most sites have talked about Huawei’s attempt to go into the mobile business and Palm will provide a great platform to build on.

However, if we are to take a step back and think. If you are the bankers, will this be the way you will try to sell to Huawei.

Couple of things we know about Huawei.

  1. They are strong in networking, telco areas and is doing very well.
  2. Without a doubt, Huawei is one of the great success stories of a tech company from China (apart from the likes of Baidu, Sohu etc).
  3. Yet, despite having revenue of more than US$21B, Huawei is not listed.  (source: Reuters http://www.reuters.com/article/idUSTOE60303720100104 )
  4. It’s rival, ZTE, is listed in the Hong Kong exchange.

What if Huawei use Palm to get itself listed? Though, I have to acknowledge that Huawei can get itself listed without going through this.

Surely, the investment bankers have to provide other value added services apart from peddling Palm?