To take this idea even further, soon-to-be retired Cisco Chief Executive Officer John Chambers should offer Ubiquiti Networks Founder and CEO Robert J. Pera, a Board of Directors seat and groom him, over the coming year, as the new CEO of Cisco Systems.
It may sound far-fetched to some who are unaware but it is time for the masses to realize that Pera's performance
as CEO of UBNT was perhaps the strongest of any company on Wall Street in 2013. Thus, it was certainly not by accident that UBNT was the fifth best overall performing stock of 2013.
This is my first authored Seeking Alpha article in more than a year and only my third overall. I was certainly scrutinized (read comments) when I suggested that Pandora was going to be a $56 dollar stock in my November 2012 article at a time when Pandora (P) was selling at a mere $7 handle. I only own four stocks presently including P and UBNT. I built my position in UBNT between March-June of 2013. It was the hiring of Craig Foster as CFO which I felt gave Ubiquiti the needed credibility for me to pull the trigger and become an investor. I sold some of my UBNT shares last month to buy Evertec Inc. (EVTC) which is the only company I intend to purchase in 2014 (perhaps another article for another day). I still, however, hold a sizable long position in UBNT. And while I see Cisco's need to acquire Ubiquiti as an essential priority to their future business
prospects, as a UBNT shareholder I have my misgivings.
Ubiquiti Networks excels at something that Cisco has been lacking for too long...fresh innovation. Ubiquiti has consistently rolled out high quality wireless
products that satisfy users at price-points that confound rivals. Its UniFi line of enterprise wi-fi is enjoying juggernaut sales growth that only Cisco outsells in volume. Pera predicted during his August 2013 earnings conference call that UniFi will surpass Cisco in volume sales in the next 12-24 months. Analysis of Gartner research would support this claim if the current trajectory continues. And while Cisco continues to disappoint its investors with sluggish growth, Ubiquiti has beaten and raised estimates for four straight quarters following a positive resolution to the product counterfeiting issues they endured during 2012. Moreover, Ubiquiti Networks has established a business model that is an example of their "out of the box" thinking. It has allowed them to keep their strong growth spurt in-tact while other rivals like Aruba Networks (ARUN) and Ruckess Wireless (RKUS) have simultaneously floundered. Ubiquiti is a lean, sub-200 employee company with no sales staff. Even their means of customer service
is cutting edge with an effective community board designed to provide rapid-fire troubleshooting answers to customers in need (and who doesn't require their problems solved immediately?).
I won't overload this article with the Ubiquiti Networks financial metrics. I would advise anyone interested to seek out the terrific writings of fellow Seeking Alpha author Matthew Dow. Matthew, for some time, has been writing about UBNT and their eye-bulging key statistics (plus, you'll often notice my comments below his UBNT articles of the past 10 months or so). I feel Matthew has done a better job
following this company than any of the analysts whose job it is to do so.
The eight billion dollar CSCO bond sale would hypothetically amount to a $91 per share UBNT offer. My guess is that Pera, who owns 2/3rds of his company, would rebuff (as would I). However, a $120 per share offer would seem fair and would provide Cisco with a young, sage and hungry leader that would give them what Facebook gained when purchasing What'sApp for 19 billion dollars: An assurance to Cisco stakeholders that the company is seeing around the corner and is positioning itself with the tools necessary to continue being a dominant force in its industry