Their long-term prospects are less than stellar. They're having the benefit of being in the midst of a product lifecycle upgrade period, but they've trimmed all the overhead they can and they still aren't turning the corner. When you put their earnings up against companies like FFIV, RVBD, SWI, etc....they don't look good. I don't mean on a dollar for dollar angle, I mean in terms of market share and growth.
-F5 and A10 have completely eaten their lunch in the coveted traffic management space
-Riverbed and Silver Peak have embarrassed their WAAS/Wave boxes in the WAN optimization arena
-They've rested on their laurels too much in the security space, and now companies like Palo Alto have come out with true next-gen firewalls and are taking a big ole bite out of their ASA market - and will eventually render Cisco an also-ran in the niche. Their FWSM's never took off the way they hoped, nor their ACE modules.
-They're even starting to lose share in the core layer space. They made the mistake of designing their 7000 series Nexus boxes to be end-of-row devices that face the wrong direction, with the end result being that your options were to either take a chainsaw to the sides of them (ala Disney) or else melt your datacenter when you powered them on. Juniper grabbed a big ole piece of market from them in this arena because engineers either didn't have access to a chainsaw (I'm really not kidding here...) or decided they didn't want to deal with the design nightmares that came with accommodating Cisco.
-Avaya recently purchased a bunch of Nortel's copyrights and divisions and is starting to make a strong push in the Unified Communications space, which bodes ill for Cisco's UCS and VoIP markets
-Barracuda Networks is eating their lunch in the spam/application security space because Cisco hasn't significantly improved the Ironports in forever
-Cisco Prime (aka CiscoWorks) doesn't even begin to compete with Solarwinds, Spice or Zenoss
-And they can't even begin to compete with companies like Top Layer Security in the IPS arena.
Their play in the wireless space is still relatively secure, the 3750 is still the access-layer workhorse of most datacenters, and their core and ASR routers are still the brand of choice, but this is a company that's getting attacked from a lot of different sides, has no real answer for any of them, and as time progresses is going to lose a lot of their base market share as CIO's start to listen to their button pushers and stop just buying Cisco because that's just what the CIO has always done.
Since this stock never moves all that heavily in any direction, that only makes it an attractive play for long-term investors. But this company's long-term prospects are anything but secure. I wouldn't touch it, personally. John Chambers needs to go, and the company needs to consolidate its offerings and develop more focus on what it's going to be instead of trying to be everything.
