Cisco has got a big plan to beat its greatest rival…"
http://www.businessinsider.com/cisco-versus-arista-for-400g-…
In September, Morgan Stanley’s James Faucette came down as bullish on Arista, saying he believed it was positioned to grab the 400G market, just as it had fared so well against Cisco in 100G. Kvaal says that Cisco has no intention of letting that happen. He writes, “we believe Arista caught a wave with the 100G cycle that propelled strong share gains in 2017. Cisco claims to have teams of people working to prevent the same from happening again with the 400G cycle as it hits scale in 2019 and 2020.”
Cisco and Arista have a long and contentious history. Arista was founded by former Cisco star engineers and, under former CEO John Chambers, Cisco created what it called a “tiger team” dedicated solely to competing with Arista.
ANET is one of my biggest holdings, and I’m sure it is for many others on this board. Curious if anyone thinks an allegedly resurgent Cisco is a sleeping giant awakened to the challenge posed by Arista, which seems very personal and like a Tottenham/Arsenal derby rivalry.
Supposedly Cisco has created a “tiger” team to deal with this…
http://www.businessinsider.com/cisco-tiger-team-attack-arist…
Obviously, we know from the lawsuit Cisco is scared of Arista.
Curious if we have any tech/networking experts here who can help us handicap the 400G battle?
To simplify the overall story…
- ANET continues kicking ass and stealing greater market share
- ANET and Cisco bring out the best in each other and share a good-sized, growing pie
- Cisco ups its game to the point of significantly stalling ANET’s march to glory
- Cisco crushes the smaller player
Bottom line questions:
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How do we handicap the race in hard tech terms? Apology if I missed a good post on this subject. If I’m gonna bet the Super Bowl, I like to understand the inner workings, etc. Is it enough to say ANET’s got elite players, they’ll be fine?
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Do people think that Cisco is a fat old un-innovative slob whose best days are behind it, making the glide path for ANET easier? Or might their alleged resurgence be informing the more cautious outlook from ANET noted by other posters?
Personally, I’m definitely holding and riding this thing out for 5 years minimum. Will probably add more on this dip, especially if it gets worse.
Best,
Broadway Dan
17 Likes
Personally, I’m definitely holding and riding this thing out for 5 years minimum. Will probably add more on this dip, especially if it gets worse.
After posing on those questions, why would you say that you want to lock in for 5 years? Don’t you want to get the answers to your very good questions and then make a decision?
Chris
4 Likes
Great question, GauchoChris.
I’m heavily influenced lately by Tom G’s passion for holding long term. And I’m the most hyperbolic emotional SOB in Fooldom. When I say “definitely” it means there’s an over 70% chance. I also have given up a small fortune by selling great companies too early due to a tendency to freak the **** out over modest setbacks.
My dream is to have 100% perfect knowledge before investing/holding. This is silly. I think this story needs time play out and to be honest, I’m as certain as I can be that this is an elite, inspired, effective company. I don’t see the foundation of the story being changed by some slowing growth. If their equipment was getting awful reviews, if the CEO seemed delusional, if they were getting whupped I’d reevaluate.
Even if ANET is just a good company, to me they are like drafting a kid out of college who has very solid talent, a great head on his shoulders and a history of success. Worst case is he has a decent career. Best case he becomes Tom Brady. I think odds of Cisco crushing them totally are small. I can’t see ANET ever becoming Johnny Manziel.
I hope this clarifies my thoughts on this a bit.
BD
7 Likes
I’m heavily influenced lately by Tom G’s passion for holding long term. And I’m the most hyperbolic emotional SOB in Fooldom. When I say “definitely” it means there’s an over 70% chance. I also have given up a small fortune by selling great companies too early due to a tendency to freak the **** out over modest setbacks.
Yeah, but don’t you want to let new information influence you? Your confidence in the company and in its current valuation in comparison to future earnings growth is a factor. If you want to blindly sit put (head in sand?) regardless of how the stock moves and how the results of the company’s business unfold just seems silly to me…unless you just don’t follow the company closely enough or you’re not so good at assessing the financials and the situation. I’m not at all referring to “you” as Dan but rather “you” in the general sense so please don’t take this personally. Also, allocation is a way of dialing up or dialing down depending on your confidence.
So why did I sell some shares? I think ANET may well be sandbagging. Or more likely management just don’t have very precise visibility on future growth. They’ve guided around 25% growth. I think they may we beat that significantly. But now the “market” thinks they will get only around 25% growth. So I sold more because 1) my allocation was really big (was my largest holding), and 2) I think the stock will probably not recover until ANET beats whether that is in May, July, or September (or all of them) I don’t know. So I’ve moved some money to a different horse that I think will probably grow more in the next 3-4 months. I’ll make a decision on whether to buy back some ANET as we get close to the Q1 earnings release. Several years ago, I was a bit of a different investor and would take my own conviction as the only factor in my investment decisions. I now take my idea of the “market’s” view into account; it’s not that major factor as I still consider my own conviction more important but the market’s sentiment is now a factor for my allocations and investment decisions.
Chris
20 Likes