We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cisco (CSCO) to Invest $4 Billion in Mexico to Boost Output
Read MoreHide Full Article
Shares of Cisco Systems, Inc. (CSCO - Free Report) have been scaling steadily higher over the last 12 months. The company’s stock provided a return of 24.46% as compared to the S&P 500’s 13.09% over the period.
Notably, the company’s stock was up 1.35% on Tuesday afternoon, following a Reuters report that the company is ramping up its investments in Mexico to the tune of $4 billion in a bid to increase production.
Cisco plans to deploy the amount in Mexico through 2018. Additionally, it intends to secure contracts with independent manufacturers for production rather than augmenting its own facilities that it already has in the country.
The move will boost the company’s output of products such as routers, switches, servers and wireless access points.
Focus on Mexico
Mexico is rapidly emerging as the preferred outsourcing destination for many American companies. The country’s lower labor costs coupled with geographical proximity to the U.S. and a conducive business environment is helping the nation to attract investments and fuel economic growth.
We note that, in Apr 2016, Ford Motor Co. (F - Free Report) announced that it intends to invest $1.6 billion in the country to set up a small-car facility.
In Jun 2015, AT&T, Inc. (T - Free Report) announced a whopping investment of nearly $3 billion in Mexico to augment its mobile internet service. Earlier that year the company had spent $4.4 billion for acquiring Nextel Mexico and Iusacell.
Our Take
Cisco Systems is a leading provider of IP-based networking and other products. The company’s fiscal fourth-quarter earnings were above the Zacks Consensus Estimate. We are positive about the company’s market position, its ability to innovate, product range, growth initiatives, new investments and dividend payout. Additionally, overall growth prospects remain positive because of the drive toward cloud computing and increasing data flow on carrier and computing networks.
Cisco’s decision to deploy additional funds in Mexico comes at a time when the company is considering a 7% job cut worldwide. As per a Bloomberg report, Cisco intends to invest the savings from the job cuts in emerging sectors such as connected services and cloud computing.
However, increasing competition and challenges in China remain concerns for the company in the long run.
Notably, the estimates for Lantronix for the current fiscal year have narrowed down from a loss of 21 cents to a loss of 8 cents.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Cisco (CSCO) to Invest $4 Billion in Mexico to Boost Output
Shares of Cisco Systems, Inc. (CSCO - Free Report) have been scaling steadily higher over the last 12 months. The company’s stock provided a return of 24.46% as compared to the S&P 500’s 13.09% over the period.
Notably, the company’s stock was up 1.35% on Tuesday afternoon, following a Reuters report that the company is ramping up its investments in Mexico to the tune of $4 billion in a bid to increase production.
Cisco plans to deploy the amount in Mexico through 2018. Additionally, it intends to secure contracts with independent manufacturers for production rather than augmenting its own facilities that it already has in the country.
The move will boost the company’s output of products such as routers, switches, servers and wireless access points.
Focus on Mexico
Mexico is rapidly emerging as the preferred outsourcing destination for many American companies. The country’s lower labor costs coupled with geographical proximity to the U.S. and a conducive business environment is helping the nation to attract investments and fuel economic growth.
We note that, in Apr 2016, Ford Motor Co. (F - Free Report) announced that it intends to invest $1.6 billion in the country to set up a small-car facility.
In Jun 2015, AT&T, Inc. (T - Free Report) announced a whopping investment of nearly $3 billion in Mexico to augment its mobile internet service. Earlier that year the company had spent $4.4 billion for acquiring Nextel Mexico and Iusacell.
Our Take
Cisco Systems is a leading provider of IP-based networking and other products. The company’s fiscal fourth-quarter earnings were above the Zacks Consensus Estimate. We are positive about the company’s market position, its ability to innovate, product range, growth initiatives, new investments and dividend payout. Additionally, overall growth prospects remain positive because of the drive toward cloud computing and increasing data flow on carrier and computing networks.
Cisco’s decision to deploy additional funds in Mexico comes at a time when the company is considering a 7% job cut worldwide. As per a Bloomberg report, Cisco intends to invest the savings from the job cuts in emerging sectors such as connected services and cloud computing.
However, increasing competition and challenges in China remain concerns for the company in the long run.
CISCO SYSTEMS Price
CISCO SYSTEMS Price | CISCO SYSTEMS Quote
Zacks Rank & Key Picks
At present, Cisco carries a Zacks Rank #3 (Hold).
A better-ranked stock in the broader technology space is Lantronix, Inc. (LTRX - Free Report) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Notably, the estimates for Lantronix for the current fiscal year have narrowed down from a loss of 21 cents to a loss of 8 cents.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>