Back on May 9, Internet bellwether Cisco Systems Inc. (Nasdaq: CSCO) warned investors of a weaker-than-expected outlook for the current quarter - thanks to what CEO John Chambers described as a "cautious" spending environment for networking gear.
Cisco's shares were trashed - as were many other tech-sector stocks.
So I was more than a little surprised when Cisco later announced that a new company study says that Web traffic will quadruple in the next four years.
That's one hell of an about-face. But if it's true, it also represents one hell of a profit opportunity.
To sort this out - and get the real story for you - I went directly to our new tech-sector expert: Radical Technology Profits Editor Michael A. Robinson.
The bottom line is that Michael says Cisco's traffic estimate is accurate in terms of its magnitude. He's a bit less sanguine about its target date, however.
"You know Bill, there's an old investing adage that says to never have a date and a number in the same statement," Michael quipped. "Like so many futurists, Cisco is guilty of making an all-too-definitive statement. I have no doubt that the company is correct in the broadest sense in terms of the traffic increase it sees. We'll see about the timing."
Let me be right up front with you: I like Michael.
Like me, he's an author and former journalist. And he's one of the sharpest tech analysts I've ever met.
As kind of a cross between tech prognosticator Ray Kurzweil and pioneering Internet analyst Mary Meeker, he's one of those rare folks who has the broad knowledge and vision of a futurist, but who can also cut to the chase by identifying money-making investment opportunities.
And this ramp-up in Internet traffic is just one of the lucrative possibilities he's already looking into.
"I use the term "Internet' much more loosely than most analysts," Michael said. "I look at it as "networked knowledge.' That opens it up to such things as intranets, cloud computing, machine-to-machine communications, and the "Internet of Things,' to name just a few. General Electric (NYSE: GE) recently announced it was investing $1 billion to develop the Industrial Internet. My view of the Internet includes some way-out stuff that looks well into the future."
By defining the Internet as more than just the World Wide Web, Michael is able to look at a plethora of investment plays, including:
- Passive surveillance.
- The "pick-and-shovels" Internet backbone.
- Sensor-driven real-time communications.
- Wearable computers.
- Entertainment and gaming.
- Mobile communications.
- E-commerce (including mobile commerce).
- And social networking.
Among the stocks he mentioned, there was one he specifically wanted me to pass along to you - Web.com Group Inc. (Nasdaq: WWWW).
The Jacksonville-based Web.com provides Internet services to small- to medium-sized businesses (SMBs, in business geek-speak). The services include domain-name registration, Website design, search-engine optimization (SEO), search-engine marketing, mobile products and even call-center services. As of December 2011, it had 3 million subscribers.
"I see two significant catalysts for Web.com," Michael told me. "First, the industry is moving to HTML5, a major rewrite of the actual software for the Web. That will generate interest in new Website designs that offer splashier graphics, but will still be easy for browsers to use. Second is the fact that the company has applied to become the exclusive registrar of the dot-web (.web) domain-name suffix. This could be huge because a lot folks can't get their domain names in a format that makes sense."
You also have to like the fact that this company is a survivor - not a Johnny-come-lately: It survived the dot-bomb implosion of the early 2000s and has made itself relevant as an ongoing business.
Wall Street is catching on: The consensus rating on the stock is a "Buy/Strong Buy" with a high target of $27 - up 45% from current levels.
You can expect to read more about this trend in future issues.
William Patalon III, Executive Editor
Since its launch in August, Bill Patalon's Private Briefing has been an overnight success.
With his 24/7 access to stock market gurus like Martin Hutchinson, Keith Fitz-Gerald, Shah Gilani, Dr. Kent Moors, and now Michael A. Robinson, Bill is able to provide Private Briefing subscribers with an inside look at some of their key recommendations. To learn more about Private Briefing, click here.