Buy-Side and Sell-Side Analysts - An Analysis

Recently, I had opportunity to attend an SVForum SIG meetup on "Cloud M&A: Buy-side and Sell-side Dynamics in 2012 and Beyond". I had to get clear on the two concepts of Buy-Side and Sell-Side before I went into listen to the panelists. This exercise in learning itself was an eye-opener on how phrases get into usage in natural languages.

To begin with, Buy-Side and Sell-Side are not exactly what they seem. Let us start with some definitions, from Investopedia:

The side of Wall Street comprising the investing institutions such as mutual funds, pension funds and insurance firms that tend to buy large portions of securities for money-management purposes.

Read more: http://www.investopedia.com/terms/b/buyside.asp

The retail brokers and research departments that sell securities and make recommendations for brokerage firms' customers.

Read more: http://www.investopedia.com/terms/s/sellside.asp

Buy-Side analysts seem to be really doing what the phrase seems to suggest: Analyze stocks and other instruments to help in potential, eventual, buying of the equities. The Sell-Side analysts, on the other hand, deal significantly with retail investors, and can enable or, influence, buy or sell decisions by the retail investors.

If both buy and sell decisions are enabled by these Sell-Side analysts, why call them only Sell-Side?

Tidbits from the opening session of the Cisco Financial Analyst Conference September 2010

If you watch John Chambers' presentation on the opening session of the Cisco Financial Analyst Conference of today, it is difficult not to make a couple of these observations:

1. The demonstration of a highly collaborative educational environment is very eye-opening, and it amplifies the distinction between an Apple iPad and a Cisco Cius. The power of collaborative information exchange seems to have the so-called network effect built into it. Once students around the world start making use of this device, it is easy to imagine Tom Friedman's recent observation: In a flat world where everyone has access to everything, values matter more than ever.
2. John presents excellent arguments as to why commoditization of Cisco's market segment is a distant one: Architectural play, that involves numerous products and processes integrating them. A single product solution cannot even come close. The slide presented on this topic, shown here, is very self-explanatory.





3. Finally, it looks like there will be dividend on Cisco stock, with 1-2% yield, starting from FY 2011, and we are already in the new fiscal year. With the stock closing at $21.45 (+$0.19) today, you can expect to get dividend income anywhere from $0.21 to $0.42 per share of stock; or, even if the stock doubled by July 2011, you may be able expect $0.42, or 1%.

Disclaimer: I am an individual investor in Cisco stock.