Cisco (CSC) eyes consumer entertainment
"Cisco (NASDAQ: CSCO) has increasingly developed a series of technologies more closely tied to end-users -- with a focus on the home entertainment hub," notes Toby Smith.
The editor of ChangeWave Investing explains, "The company understands that the market for consumer electronics products is too big and too important to ignore."
"It is well known that Cisco is the dominant supplier of the switches and routers that enable networks and computers to be linked together.
"Recently, Cisco made its most consumer-oriented acquisition by picking up privately held Pure Digital Technologies, the maker of the popular and simple-to-use Flip video camcorder.
"Cisco will pay $590 million for Pure Digital, a price that falls into the low-end range of CSCO's previous acquisitions.
"Pure Digital has sold more than two million of its Flip mini-camcorders, priced at about $130 to $230, in two years.
"The camcorders have software to easily organize and edit videos and post them on Web sites such as YouTube or MySpace. And this acquisition is not the first consumer-focused acquisition for Cisco.
"In 2003 the company purchased Linksys (a router maker for home networking), in 2005 it acquired Scientific Atlanta (one of the leaders in set-top TV boxes) and in 2007 CSCO got WebEx, a maker of Web conferencing systems.
"When you add up all of these technologies it spells 'home entertainment hub'. Cisco knows that the increasing activity on the internet translates into larger sales of its networking devices.
"The goal is the ability to share any content on any device -- and it's a goal that both Apple and Sony are also pursuing.
"The day is fast approaching when most homes will link computer, TV, stereo, game console, smart phone and camcorder -- and Cisco intends to be a (if not 'the') primary integrator of this home entertainment and communications hub.
"Cisco's shares have rallied 23% since its multi-year low several weeks ago. We continue to recommend that investors accumulate CSCO on stock price pullbacks."
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