Cisco Has At Least 11% Short-Term Upside
By Romano Bastianpillai:
Investors are always looking for opportunities. Fortunately for equity investors, such opportunities arise due to the erratic actions of the market. On August 14th, Cisco (CSCO) Chief Executive Officer John Chambers announced 4,000 job eliminations. Subsequently, the stock price tumbled by as much as 11% and has hovered near the $24 range to date. Although future growth prospects may not be as rosy as originally projected, the recent drop presents buying opportunities. Here's why:
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Background behind the Layoffs
Clearly, the layoff announcement triggered the price drop due to the sequence of events. To put the numbers into perspective, the announced layoffs accounts for approximately 6% of the total workforce. Mr. Chambers indicated that the workforce reduction was a strategic decision to reallocate resources for more lucrative endeavors including cloud computing, mobility and internet products. It can be inferred that this resource allocation would result in job ...