TRADE INSTRUCTIONS
Date: May 19, 2017
Name: Cisco Systems
Symbol: CSCO (NasdaqGS)
Type: Extend 
Extension Period: 1 month

TRADE RATIONALE
Our position in Cisco was performing very nicely until two days ago when the company released its third-quarter earnings report. The problem wasn’t so much with the quarterly earnings figure, which came in above estimates, but with the dour guidance that accompanied it. At the same time, the company revealed it would be eliminating an additional 1,100 employees in addition to the 5,500 job cuts it had already announced.

I rarely extend a trade, but in this case I feel the opportunity for a quick 3 – 5% bounce back over the next thirty days is worth the extra time. And if it appears that President Trump will be able to get a tax reform package through congress, the upside could be even greater than that. At its reduced share price, CSCO is priced at 13x its revised forward earnings estimate. It deserves to trade at a discount to the overall market, but a multiple of 15x strikes me as more appropriate.