BradReese.Com Instant Quotes

Home About Repair Power Supplies Refurbished Blog Quick Links Site Map Contact Us

BradReese.Com Blog by Brad Reese


Power Supplies

VoIP Gateways

Cisco Repair

Refurbished Cisco

Cisco CPQRGs

New Cisco

New HP ProCurve

Cisco Tools

Competitive Lab Tests

Tech Forums

How-to Tutorials

CCIE Gossip


View Archive of the BradReese.Com Blog

Subscribe to the BradReese.Com Blog

HP leveraging Cisco's supply chain issues to recruit channel partners?
Thu, 6/17/10 - 1:05am    Add your comment

HPFrank RauchHP appears to be taking advantage of Cisco's supply chain issues in order to recruit new channel partners.

How so?

Well, it appears HP's supply chain is relatively unaffected when compared to Cisco's widespread component shortages.

However, HP's not seeking to recruit small time Cisco channel partners, HP's targeting the "cream of the crop" of the Cisco channel partner elite. According to Frank Rauch - vice president of HP's networking channel sales, "We want it to be extremely profitable and extremely predictable for the partners that are willing to step up. By the way, we are going to put the bar high and those that are able to reach that bar will benefit."

Mark SueRBC Capital MarketsBut according to RBC Capital Markets Managing Director - Mark Sue, HP's recruiting effort might be nothing more than wishful thinking:

"Cisco's differentiated go-to-market strategy with a focus on profitability around services offered by the partners has limited its competitors from gaining traction with its channel partners. Competitor HP's messaging is directed around the hardware as it attempts to commoditize the space.

"Cisco is reaping the benefits from its investment in its channel partners during the last downturn with 80% of its revenues coming from channel partners. Cisco boasts 60,000 partners worldwide with 12,000 certified partners generating 90% of channel revenues. With 280,000 people selling Cisco gear through the channels, Cisco enjoys a 16:1 multiplier effect on its direct sales force."

CiscoSue continued, "On Cisco's UCS initiative, it took some time to convince partners that were already selling Data Center solutions, to switch to Cisco's UCS. However, with the partners providing the services solution around UCS, the margin profitability was a compelling factor. Now the Company has >800 partners signed up as Cisco data center specialists, far better than Cisco's expectations. And the cost savings associated with virtualized Data Centers are driving Cisco's success despite the current economic uncertainty."

Keith GoodwinSue added, "Despite the macro concerns around Europe, SVP of global channels at Cisco, Keith Goodwin, said the Company is not seeing an impact in Europe. Cisco's channel partners in Europe are still enthusiastic and not seeing an impact either. While Europe is ~22% of Cisco's overall business, countries impacted by the current crisis represent < 4% of Cisco's overall business. If anything, partners are seeing business growing across geographies with the need for increased network bandwidth a key driver."

Sue concluded, "Cisco's stock currently trades at 2.3x our CY11 revenue estimate net cash and 13x our CY11 earnings estimate, which does not reflect options expensing. Our 12-month price target of $33 is 18x our CY11 EPS estimate, which is above the current mean of 13x. Target multiple is closer to 17x blended CY10/CY11 EPS net cash of $4.07/share. We believe CSCO deserves a premium multiple because of its strong cash flow, balance sheet and industry position."

HP (HPQ) vs. Cisco (CSCO) Stock Chart

HP (HPQ) vs. Cisco (CSCO) Stock Chart
Source: Yahoo! Finance

What's your take, do you think HP can successfully recruit Cisco's elite channel partners?

Contact Brad Reese

Subscribe to the BradReese.Com Blog

Brad's Favorite Story Picks

  1. Accepting pre-orders for the new August 2010 edition of the Cisco Product Quick Reference Guide
  2. F5 Networks has nearly 20-point market share lead over Cisco
  3. Pricing on Cisco's new NSS 300 devices
  4. Does Polycom telepresence cost $2.1 million less than Cisco telepresence?
  5. 255 newly minted Cisco CCIEs are projected for 2010
  6. The very, very last Cisco CCIE count comparison in history
  7. Cisco's financial exposure to its Brazilian tax scandal, $1.875 billion, is growing at the rate of $1.185 million per day
  8. Cisco's CCIE statistics vanish
  9. How-to configure a free NetFlow forwarder or NetFlow duplicator
  10. How Cisco CCIEs can cash in on the virtualization trend
  11. John Chambers appears to lack a true conviction that Cisco's stock price will appreciate in value
  12. Cisco CEO John Chambers had perfect timing executing his insider Cisco stock trades
  13. Billions in Cisco stockholder wealth will be made or lost
  14. The world's most successful secondary Cisco reseller, Mike Sheldon, attacked by Cisco's fanboys on Network World's Cisco Subnet
  15. Crisis appears brewing within Cisco's prestigious CCIE program
  16. Cisco pays an average salary of $112K to its H-1B visa workers
  17. Total Cisco CCIE count drops -21, R&S count drops -66 since March
  18. How-to setup sampled Cisco NetFlow
  19. Data centers: Cisco's multi-tier architecture vs. the Arista 2-tier cloud network
  20. View BradReese.Com Blog Archive
blog comments powered by Disqus

Brad Reese music work ambience

Supplement Cisco SMARTnet Contracts


©2011 BradReese.Com - Home - About - Repair - Power Supplies - Refurbished - Blog - Quick Links - Site Map - Contact Us