RBC downgrades Cisco two notches to 'underperform'

RBC Capital Markets downgraded Cisco Systems Inc's stock to "underperform," saying the network equipment maker is concentrating more on reorganization, and not on reclaiming market share or developing products.

The brokerage also said Cisco may have erred by entering into the $48 billion server market, which has long been dominated by Hewlett Packard, IBM and Dell, all formidable rivals.

RBC believes the reorganization process could have created a false sense of productivity and may not be addressing more important matters such as tackling increasing competition and spending on research and development.

Separately, the brokerage downgraded Cisco's smaller rival Juniper Networks to "sector perform."

It believes the company is facing a back-end loaded quarter in the near term, stemming from slowed demand for some of its switching and security products as competition intensifies.

However, an arsenal of new products scheduled to launch this year may reignite Juniper's topline growth, RBC said.

Shares of Cisco were up at USD 15.12 before markets opened on Tuesday. They had closed at USD 15.06 on Monday on Nasdaq.

Juniper's shares closed at USD 29.91 on the New York Stock Exchange on Monday.