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Update Cisco Systems (CSCO)
03/11/2010 12:41 pm EST
The stock actually dropped 26 cents a share the day after the teleconference.
I can understand the investor disappointment. The CRS-3 isn’t an iPhone-like consumer product.
But the CRS-3 is still huge news.
This could well be the core platform for the next video-and-data-heavy version of the Internet. The CRS-3, an upgrade for the 6-year-old CRS-1, offers three times the performance of the earlier platform at about the same price (and 12-times the performance of any current competing core router.) The new platform can handle 322 Terabits of data, video, whatever per second. AT&T (T), which took a turn at the teleconference, has tested it in the world’s first 100-Gigabit Internet backbone network between New Orleans and Miami.
Cisco has argued that the next version of the Internet will need the capacity to deliver video on demand and transmit high speed data and enable real-time teleconferencing at 100s of times today’s volume at 100’s of times today’s speed. The CRS-3, which Cisco says took $1.6 billion to develop, is the company’s bid to own that future.
The CRS-3 won’t show up on Cisco’s top or bottom line soon—it is scheduled to start to ship in the third quarter of calendar 2010—but I think it does assure Cisco’s continued dominance of the Internet equipment sector.
As of March 11, I’m leaving my target price for Cisco Systems at $29 by June 2010.
Full disclosure: I own shares of Cisco Systems in my personal portfolio.
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