Cisco is well-known in the tech industry. Its products and services are sold all over the world. That's why Cisco attracts a lot of attention from investors as well. However, things are not looking good for Cisco right now - The earnings report is softer than expected, and it seems that the company is struggling to move toward a subscription-based business model.
Another problem is the rising competition from other tech companies which are offering better and more user-friendly technology. To be successful, the Cisco company will have to appeal to the average customer - In fact, Cisco will have to become the best option among its peers!
Based on these findings, experts believe that the medium-term outlook for the Cisco stock is stressed. And it will remain that way until Cisco can find a way to solve its problems.
Last but not least, the COVID-19 pandemic has also created a lot of problems for Cisco. For starters, the corporate spending on the data networks was reduced, which directly affected Cisco's bottom line.
To cope with the new changes on the internet front, Cisco is now more focused on software sales which can help it generate recurring cash flow. That's why Cisco is now moving towards the internet of everything motto as well!
The internet of things devices which are said to be the future, is also an important area for Cisco... In fact, the company is changing its business model to start offering software subscriptions that are recurring in nature.
In 2022's last quarter, the revenue from subscriptions was up by 8% for Cisco, which is a good thing. However, Cisco will need to work more in this particular area to generate more income. Another important segment for Cisco is the services from where it generated around 26% of revenue.
Cisco is also one of the many companies which are affected by the supply chain crunch. From a shortage of semiconductors to lockdowns and whatnot, Cisco has suffered a lot!