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Better Buy: Cisco Systems, Inc. vs. Oracle Corporation

Cisco (NASDAQ:CSCO) and Oracle (NYSE:ORCL) are both mature tech stocks that are usually owned for income instead of growth. I compared these two stocks last October, and concluded that Cisco's lower valuation, higher dividend, and heavier use of free cash flow on acquisitions and dividends made it a better buy than Oracle.

Since that article was published, Cisco shares have risen 11% while Oracle shares have climbed 19%. Was I wrong about Cisco being the better play, or will the stock head higher over the long term? Let's reexamine both companies' strengths and weaknesses to find out.

Image source: Getty Images.

How fast are Cisco and Oracle growing?

Cisco and Oracle are both slow-growth companies. Cisco's revenue growth (including its now-divested set-top box video unit) was flat in fiscal 2016, and analysts anticipate a 2% decline this year. That slowdown was mainly caused by sluggish sales of routers and switches (46% of sales in the first half of 2017) in a highly competitive and commoditized market.

To make matters worse, the growing popularity of "white box" hardware powered by open source software has cast a long shadow over the future of both core businesses. Cisco is trying to counter those threats by expanding its higher-growth security, wireless, and collaboration businesses, but the transition is a slow one. The company is widely expected to...