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Subject:  Re: Chinese control of U.S. telecom? Date:  10/8/2012  6:03 PM
Author:  qazulight Number:  405575 of 546025

Cisco is already positioned for that. Hence, I think an initial position in Cisco is appropriate, or to buy on a 'correction',

I would seriously reconsider a position in Cisco, I could be wrong, but listen.

Cisco has three problems, two have to do with the nature of the telecommunications industry and one is a problem with Cisco.

1. Cisco does not have a 5 nines heritage. Now that is not to say that Cisco has not built a system or a series of systems that can meet the 99.999 percent up time. What Cisco does not have is a culture that is a century old with the idea that everything is 99.999 percent reliable. In fact Cisco comes from the other culture, a culture of "best effort" and "mostly reliable" This isn't to say the equipment cannot work well, in fact equipment is really not a problem. What will give Cisco headaches, and its customers, are the software patches. The idea of, "We'll send this one out, and if it is a problem we'll fall back." Well that might work, but when you take the entire communications system down for 5 minutes, even once every other year, that is simply not acceptable. The entire system can NEVER fail. There is a culture with in a company required to produce those results, Cisco wasn't born with it, and I doubt that it has been successfully grafted into the Cisco culture.

2. If Cisco were to actually get into the telecom industry in a big way, it would probably end up squeezed to death. I don't know about Verizon, but At&T has a culture of squeezing vendors to the point of getting blood out of turnips, not just any blood, the good bright red blood. Walmart probably learned its lessons on supplier squeezing from Ed Whitacre. If you are thinking that Cisco would be a buy on heavy sales gains in the telecommunications sector, I would be buying your puts.

3. The CEO of Cisco does not look out for his share holders. He has "bought back shares to return value to the share holders" for years, yet the share count doesn't do down and the earning per share doesn't go up. This is due to executive compensation. My belief is that he were to get a tax break and were to repatriate the offshore funds to the U.S. not one dollar would make it to the investors or to investment, all would end up in share buy backs that are cover for share dilution stock options.

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