CSCO
Cisco
Dividend / Cash flow
★ Quality 59/100Price today
$109.20
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What this business is made of
The business
Cisco is the plumbing of the internet: expensive to start, impossible to replace.
Cisco sells the hardware that moves the internet: switches, routers, and firewalls for companies and carriers. The business is reinventing itself toward software and subscriptions —security, observability, managed networking— which already make up more than half of recurring revenue. It bills $56.7B with a 65% gross margin.
Enterprise switching has been Cisco territory for decades: switching providers means rewiring the entire network and retraining the IT team. That migration cost buys loyalty, not enthusiasm. The weakness is that this moat protects a business that grows little.
Revenue history
From $51.6B to $58.5B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $63.3B · FY2026
Of every $100 in sales, $79 goes to costs and operations; $21 is left as net profit (21% margin).
Catalysts and risks
Splunk integrated: $4B+ in annualized security and observability revenue since FY2025.
Demand for AI networking in datacenters; orders crossed $1B in FY2025.
Growing dividend (~$1.64/share) plus buybacks: returning more than $10B a year to shareholders.
3% growth: this is a mature business dressed up as a tech one.
Arista and hyperscaler chips erode high-end switching.
$24.6B in debt against $8.3B in cash after swallowing Splunk.
Charlie's note
“Cisco is a cash cow with a good dividend and little shine. At 12x normalized FCF you pay a fair price for a business that grows like inflation —you're buying the cash flow, not the dream.”
Analysis · June 2026
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