Why Cisco Needs To Go The Oracle Way

Cisco Systems, Inc. CSCO reported its third quarter earnings on Wednesday after the closing bell. EPS for the quarter came at $0.47, compared to $0.42 reported for the same quarter last year.

Henry Blodget, Editor-In-Chief of Business Insider, was on CNBC Thursday to discuss why Cisco needs to go for acquisitions.

Staid Growth

“From a business perspective, the big challenge they have is there are cheaper solutions out there and they are trying to maintain pricing, profits, growth,” Blodget said. “The big challenge is growth. Company had a great quarter up 5 percent, next quarter 3 percent, okay? That is very staid growth.”

“Congratulations to John Chambers, it has been a great run, he has been just a rock in the industry for 20 years, but the stock has been flat for 10 years effectively and they are in a good position to consolidate the industry.”

He continued, “the enterprise industry’s in desperate need of consolidation and they are strong cash flow, they can go about doing that, but in terms of organic revenue growth they are going to continue to face challenges.”

Got To Consolidate

Blodget elaborated on Cisco’s need for consolidation saying, “They have in fact made some big consumer bets that have flopped completely to zero and the enterprise market is massive and there are lots of smaller, weaker players out there. Chambers has made this point himself, it's got to consolidate.”

“And if you look at in the enterprise software market, one of the companies that is doing well by consolidating is Oracle. You take over all your competitors, you've cut out a lot of costs and you continue to grow from there and they have the opportunity to do that.”