Cisco Not To Be Charged By U.S. In Russia Bribery Probe

Cisco Systems, Inc. (NASDAQ:CSCO) recently announced that the U.S. regulatory authorities have decided not to carry out any enforcement actions against the company with regard to alleged violation of anti-bribery law in Russia and its neighboring countries.

Internal Investigation Leads to Clean Chit

As per a media report published in The Wall Street Journal, following the allegations, Cisco had investigated the matter internally by examining the practices and operations of certain resellers located in Russia and the neighboring nations.

The objective of the internal investigation was to determine if the company had violated the Foreign Corrupt Practices Act, which prohibits bribing foreign officials to keep or gain new business assignments.

Roxane Marenberg, Cisco’s Vice President of the Compliance Systems Division threw some light on the investigation through a blog post on the company’s website by the end of 2013. In that blog post, she wrote about business ethics and revealed that Cisco in no way violated the anti-bribery law.

In 2014, Cisco disclosed all its findings from the internal investigation to the Securities and Exchange Commission and the Department of Justice.

On Thursday, the company announced that both the regulatory authorities have declined to probe the matter further.

Technically Speaking

As we can see in the daily chart of Cisco, price is making higher highs but the 14-period Money Flow Index is unable to follow the price trend and is making lower highs instead. This is known as negative divergence. This indicates that though price is trending higher, volume doesn’t support the uptrend. This indicates a probable reversal in the short term

On Sep 8, i.e., the day of the annual report announcement, Cisco opened the day at $31.72, reached an intraday high of $31.75 and fell to an intraday low of $31.42 before closing the session at $31.47. Volume also increased from the previous day’s session. This indicates that there is good supply at higher levels.

On Sep 9, the stock fell further to close the day at $30.85 again on higher volume.

Going forward, the stock may fall further to take support at the $30.00 level. If that level breaks, the next support zone is at $29.40 to $28.70.

Zacks Rank & Key Picks

At present, Cisco carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology space are Lantronix, Inc. (NASDAQ:LTRX) , Netgear Inc. (NASDAQ:NTGR) and Radcom Ltd. (NASDAQ:RDCM) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Interested in IPOs? Check out the special edition of Zacks Friday Finish Line below, where Editor Maddy Johnson and Content Writer Ryan McQueeney interview Kathleen Smith of Renaissance Capital about the IPO market in 2016 (see part two here).

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