Cisco CEO to continue to bet on Internet of Everything to revive the biz

Cisco CEO John Chambers today said 2014 will be the inflection point for the Internet of Everything.

Addressing analyst call, Cisco CEO said the networking company will be able to revive its market conditions as it is continuing to bet on Internet of Everything.

However, Cisco does not expect an immediate business revival this quarter. “For the third quarter of fiscal 2014, we expect revenue to decline in the range of down 6 percent to down 8 percent,” said Chambers.

John Chambers Cisco

“There is no question that we have moved from a compute centric to a network-centric model for IT. Cisco is building simple, smart and highly secure solutions that will enable customers to capitalize on the cost efficiencies, agility and growth opportunities that lie ahead,” he added.

Has Cisco performed?

Cisco’s second quarter revenue drop of 8 percent to $11.2 billion was due to a number of reasons. Most of its business segments performed badly.

Service provider orders declined 12 percent year-over-year.

SP Video orders including the set-top boxes were down 20 percent.

Service provider orders, excluding SP Video, were down 7 percent.

Cisco next-generation routing business saw year-over-year revenue decline of 11 percent with orders down 5 percent.

Switching revenue declined 12 percent with orders down 6 percent.

Cisco said the Nexus 9000 booking nearly tripled. It believes it is taking share in the 10Gig and the 40Gig data center switching markets.

Data center revenue grew 10 percent with order growth rates in the mid-30s. The pipeline continues to look very strong and UCS continues to take market share.

Wireless declined 4 percent.

Cisco’s cloud networking platform, Meraki, grew 100 percent and more than doubled customers from 4,300 one quarter ago to 9,600 in this quarter.

Security revenue grew 17 percent with particular strength in network security up 21 percent and content security up 5 percent. Cisco is seeing orders grow significantly faster than revenue up 30 percent this quarter.

Collaboration revenues declined 7 percent with a decline of 9 percent year-over-year in unified communications. WebEx conferencing business rose 21 percent. This growth came from both very large enterprise deals as well as the SMB space.

Services revenue grew 3 percent with both technical services and advanced services up 3 percent.

Cisco enterprise declined 2 percent, commercial grew 1 percent, public sector grew 1 percent on a global basis, and service provider declined 12 percent.

Americas declined 5 percent. U.S. public sector declined 4 percent and within U.S. public sector state and local and education grew 7 percent and U.S. federal declined 16 percent. U.S. service providers declined 11 percent as we managed through the SP Video transition and product cycles mentioned earlier.

Asia-Pacific, including India, China and Japan, declined 5 percent. China declined 8 percent.

The Europe, Middle East Africa and Russia region declined 2 percent.

Cisco said Northern Europe and the U.K. are showing momentum, while Southern Europe continues to be challenging. Signs suggest Europe is stabilizing, they are still fragile especially in the South.

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