The following video is part of our "Motley Fool Conversations" series, in which senior technology analyst Eric Bleeker and consumer goods editor/analyst Austin Smith discuss topics across the investing world.
In this edition, Eric and Austin take a look at three things investors should be watching at Cisco. The first area Eric believes investors need to home in on is margins. Cisco's margin stood at about 64% in 2008, but has since slid down to 61%. That might not look like much, but it underscores how Cisco has had to cut deals and lower pricing to fend off routing and switching threats to maintain market share. Second, Eric believes investors should look at how focused management appears to be on networking technology. As an example, Cisco's recent buyout of NDS appears to be a costly acquisition where Cisco is once again branching out beyond its areas of strength. Third, investors need to know about Cisco's tax situation. While the company has a huge cash pile that's rapidly growing to nearly half its market cap, that value is unlikely to be unlocked unless U.S. tax code changes.
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