Will Cisco Soar in 2013?

As December comes to a close, 2013 is just around the corner, so it's a good time to look at the future prospects for the stocks you own. If you don't know where a company's headed in the next year and beyond, then it's impossible to make an informed decision about whether you should add the stock to your portfolio -- or sell it if you already own it.

Today, I'll look at Cisco Systems (CSCO 0.70%). Cisco has been a member of the Dow Jones Industrials (^DJI 1.18%) since 2009, but it's been a tech powerhouse for a lot longer than that. As we discussed earlier this month, Cisco has made modest advances in 2012. Can the company push even higher in 2013? Below, you'll see more about Cisco's prospects for 2013.

Stats on Cisco Systems

Source: Yahoo Finance.

What's in store for Cisco Systems in 2013?
As the behemoth in its industry, Cisco has the benefit of flexibility to pursue opportunities without worrying about financial failure. That's a luxury Alcatel Lucent (NYSE: ALU) doesn't have, as it had to rely on financing from a pair of investment banking firms last week in order to keep itself operating.

With that flexibility, Cisco intends to broaden its technology savvy beyond networking to become an all-purpose IT giant. In Cisco's latest earnings conference call, CEO John Chambers cited IBM as a role model for the company to aspire to, given IBM's success in going beyond its original hardware focus to provide high-margin services and boost profits.

Still, Cisco can't afford to ignore its own traditional turf. Cisco faces a big threat from Contrail Systems, the software-defined network company that Juniper Networks (JNPR 0.55%) bought earlier this month for $176 million. With VMWare (VMW) having bought Contrail competitor Nicira earlier this year, Fool senior tech analyst Eric Bleeker sees software-defined networking as the tech trend for the next decade, and it's definitely one Cisco will need to keep an eye on if it wants to stay competitive in the long run.

Cisco's low forward P/E reflects expectations of slow earnings and revenue growth for the next couple of years. If Cisco can make substantial progress in boosting its IT services offerings, though, those estimates could prove to be modest, giving Cisco plenty of room to run on the upside.

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