Technology Stock Roundup: Cisco Prints Stronger Q3, Apple/Google Call Truce - Analyst Blog

Apple AAPL and Google (GOOGL) settled all pending lawsuits last week, even as Cisco CSCO reported better than expected quarterly results and Intel INTC executives departed.

Apple and Google Call Truce

Apple and Google have announced the settlement of all existing patent lawsuits against each other. This basically amounts to the 20+ lawsuits that are the result of Google's acquisition of Motorola. Google's intention is to retain most of the patents but with none of the hassles of the Motorola business, which is why it sold off the hardware business and is now settling disputes related to the patents. In Apple's case, litigation results, even when going in its favor, have done little to mitigate the legal costs and hassles, or to ban the offending devices, or to stem the flow of customers to those devices.

On the other hand, limited collaboration between the tech giants has enabled the proliferation of patent trolls that are in the business of acquiring patents with a view to extracting large amounts as penalty for infringement. Patent infringement is different from theft in the sense that when different companies develop methods to do basically the same thing, there may be similarities in those methods that may or may not be inadvertent. So proving bad intentions is often a total waste of time and money. This is the reason that many tech companies have been collaborating and cross-licensing technologies in recent times.

Both Apple and Google have been part of such collaborations and the trend is likely to continue. The current settlement is not a cross-licensing agreement however, so future litigation between the two is not ruled out herein.  

A Beat-And-Raise Quarter for Cisco

Cisco shares surged last week when the company announced results and guidance that were both above the Zacks Consensus Estimate. Driving the results were stronger U.S. and European economies, even as government surveillance attempts continued to hurt in emerging markets. The book-to-bill was also in positive territory, fueling expectations of improving growth prospects.

But it wasn't just that – Cisco saw a rebound in its U.S. commercial and enterprise businesses, with large orders (worth more than $5 million each) jumping more than 50%. This is particularly encouraging because this segment accounts for most of its margin strength. But a bit of caution may be in order: Cisco will be ramping new products which will impact margins and so will competitors, which will impact pricing. If emerging markets start trusting Cisco again, there could be a little impact from mix as well.

The biggest challenge remains software defined networking (SDN) and although Cisco is incorporating the technology within its new switches and collaborating with other cloud players, these switches have yet to gain traction. Cisco's cash hoard should not be discounted, however; it has all that it takes to continue paying an attractive dividend, be as acquisitive as necessary and invest heavily in its own R&D. 

Big Changes Ahead at Intel Marketing

People close to chipmaker Intel are reportedly saying that a large number of marketing employees are leaving the company. In the last week itself, around 40 employees took voluntary incentives to leave. The shakeup appears extensive and may not be a big negative. The fact that even vice presidents Kevin Sellers and Nancy Bhagat are included in the list means that Intel marketing is about to get new strategic direction.

Particularly so, since this follows Intel's announcement that Steven Fund will be joining the company as the new marketing head, to report directly to Brian Krzanich from Jun 2. A description of Fund's role indicates that Intel will be going for some re-branding and repositioning, in keeping with the changing nature of its business with respect to the push into mobile and the Internet of Things.

Fund comes from Staples SPLS, which is the world's largest office products company. In that position, he was instrumental in building an integrated team across business units and geographies, enhancing the company's digital marketing and social media capabilities and repositioning the brand.

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