There are no safe havens in the stock market. Every stock carries risk. But some less than others. This column features stocks that have shown one or more of the following characteristics: less volatility, better earnings, larger market caps, safe and increasing dividends. In these times of turmoil, our goal is to show readers better opportunities for investing with fewer risks.

December 29, 2008 - Cisco Systems Inc. (CSCO-NASDAQ) designs, manufactures, and sells Internet Protocol (IP)-based networking and other products relating to the communications and information technology industry worldwide. The company offers routers that interconnect IP networks and move information between networks; switching systems, which provide connectivity to end users, workstations, and servers; application networking solutions to deploy and deliver business applications; home networking products, such as voice and data modems, network cards, media adapters, Internet video cameras, network storage, and USB adapters; and Cisco security solutions to protect information systems.

Cisco Systems has strategic alliances with Accenture, Ltd.; AT&T, Inc.; BearingPoint, Inc.; Cap Gemini S.A.; Dell, Inc.; EMC Corporation; Fujitsu Limited; Hewlett-Packard Company; Intel Corporation; International Business Machines Corporation; Italtel SpA; MicrosoftCorporation; Nokia; Nokia Siemens Networks; Oracle Corporation; Siemens AG; Sitronics Telecom Solutions, Czech Republic a.s.; Sprint Nextel Corporation; ThruPoint, Inc.; and Wipro Limited. The company was founded in 1984 and is headquartered in San Jose, California.

Right up front know this: Cisco is not expected to increase earnings in 2009. Analysts see $1.37 (24 follow the company) after this year's total of $1.56 (fiscal year ended in July). In 2010, analysts predict $1.48. So this isn't a growth stock or a hot IT company. It used to be, but not any more. Now it's more of a mature, steady earning, solid company that keeps the Internet going. And the Internet isn't anywhere near being mature.

Think of Cisco as the plumbing for the Internet. Every house needs it (if they're using a computer). When a user types in a request on Google, that information has to be sent to the right computers with the answers. Cisco's equipment makes sure the info gets to where it's supposed to go. In other words, Cisco is an integral part of one of the fastest growing, ubiquitous industries that is reshaping the world. Not a bad business to be in.

Cisco's first quarter exemplifies the company's growth. Its largest product category, switching, had revenue increase by 8% when compared to the same quarter last year, driven by demand for advanced Ethernet technologies. Routers, another division, saw revenues flat for the quarter because telecoms weren't spending. Advanced Technologies, another division, had revenues jump by 17%, powered by demand for Internet-based set-top boxes and telephones. Combined, sales were up 8% and earnings improved by 6%. With a weak global economy, management is estimating this quarter's revenues to be down 5% to 10% compared to last year's second quarter.

The company isn't exempt from economic realities. With a global economic slowdown, its order growth deteriorated markedly in the first quarter (ended in October). In August, orders were up 7% year over year. By October, they were down 9%, making for a decline of 3% for the quarter. Cutbacks are in almost every industry Cisco serves: corporations, governments, and universities all spent less.

An interesting fact about Cisco's business: 85% of it is nonrecurring. In other words, it has to continually sell new products or new customers to keep growing.

Since new products are vital to the growth plan, Cisco is constantly introducing new and improved routers and switches. The latest one is ASR9000, a router that will give broadband service providers the ability to transmit large high-definition video files. There's also the latest teleconferencing device TelePresence, an HD video conferencing system, that is selling well. It allows for participants to be anywhere in the world sharing images and info via the Internet. With travel costs higher, the TelePresence should see increased demand.

As mentioned, Cisco isn't immune from economic weakness. Still, in every other down cycle, the company gained market share, thanks to its strong management, strong balance sheet (Value Line gives it an A++ for financial strength), and innovative technologies.

There's no rush to buy the stock. The next few quarters won't have much excitement in them. But if the stock gets down to its 2002 low of $8.10 a share, it certainly would be a bargain. Keep this one on your radar screen if you're looking for decent growth and a strong company.

- Company Web site: www.cisco.com

- Ted Allrich