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Will Huawei and ZTE terminate Cisco's robust gross margin?

Wall Street appears to be ignoring Cisco's most lethal competitors, Huawei and ZTE

Thu, 11/3/11 - 11:59pm    View comments

Cisco's gross margin trend

Source: RBC Capital Markets

As the above chart indicates, Cisco's gross margin trend has not been too inspiring lately and because Wall Street is preoccupied with HP being Cisco's top competitor, it appears to have totally ignored Cisco's most lethal competitors, Huawei and ZTE (at least in my opinion).

So let's take a look at a side-by-side comparison of these 3 awesome competitors:

Competitor:
Number of employees:	71,825	110,000	85,232
Employee reviews:	3.3 rating	2.8 rating	2.8 rating
U.S. job openings	Cisco jobs	Huawei USA	ZTE USA
Ownership:	Publicly owned	Private	Publicly owned
Stock price chart:	NASDAQ Stock Market	Not applicable	Hong Kong Stock Exchange
Investment analyst forecasts:	Consensus outperform the market	Not applicable	Consensus outperform the market
Financial statements:	Annual report	Annual report	Annual report
Net revenue:	USD $43.218 billion	USD $28.4 billion	USD $10.609 billion
Revenue growth:	+7.94%	+24.23%	+16.58%
Net income:	USD $6.490 billion	USD $3.6 billion	USD $490.74 million
Net income growth:	-16.44%	+30%	+32.22%
Gross margin:	61.40%	41.85%	28.52%
Net profit margin:	15.02%	12.82%	4.32%
Operating margin:	17.76%	15.80%	6.57%
Return on assets:	7.72%	14.77%	3.83%
Return on equity:	14.19%	42.99%	14.30%
Return on investment:	9.88%	Not applicable	10.64%
Dividend growth rate (5 year):	0%	Not applicable	+26.79%
Dividend payout ratio (TTM):	10.14%	Not applicable	26.78%
EPS growth (5 years):	+5.57%	Not applicable	+18.49%
EPS (TTM) vs. TTM 1 year ago:	-12.42%	Not applicable	+19.83%
Cash flow per share:	1.61	Not applicable	1.61
Price/Cash flow per share:	10.67	Not applicable	14.23
Book value per share:	8.69	Not applicable	8.19
Tangible book value per share:	5.13	Not applicable	7.26
Current ratio:	3.27	1.60	1.24
Quick ratio:	3.18	1.29	1.00
Total debt/total equity:	0.3562	0.2106	1.32
Total debt/total capital:	0.2625	0.1740	0.5506

Related stories:

Compare the pricing and features of Cisco Catalyst 3750-E switches vs. ZTE ZXR10 5900E switches

ZTE passed Cisco to lead 3Q10-2Q11 Asia Pacific IP/Ethernet SPSR market

Huawei is one of the culprits behind Cisco's -22.4% decline in IP edge revenue share

Huawei replaced Cisco as the world's 5th most innovative

Does Huawei have the most potential to eat Cisco's lunch?
 

What's your take, will Huawei and ZTE terminate Cisco's robust gross margin?

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