Cisco revenue did not grow despite innovation and acquisitions

Cisco for CIOsCisco posted revenue of $12.1 billion (–2 percent) as its latest innovation and acquisitions failed to help achieve growth in product revenue that fell 3 percent though service revenue rose 1 percent in the first quarter of fiscal 2018.

Cisco generated revenue of $7.35 billion (–1 percent) from Americas, $2.90 billion (+3 percent) from EMEA and $1.87 billion (–1 percent) in Asia Pacific Japan China region including India.

Cisco generated $6.97 billion (–4 percent) from Infrastructure Platforms, $1.20 billion (+6 percent) from applications, $585 million (+8 percent) from security and $3.08 billion (+1 percent) from service business.

“The network has never been more critical to business success. Cisco is delivering more insights and intelligence as we help our customers build highly secure, intelligent platforms for digital business,” said Chuck Robbins, CEO of Cisco.

Cisco achieved gross margin of 61.2 percent and product gross margin of 60.1 percent. Cisco said the drop in the product gross margin compared with 63.4 percent in the first quarter of fiscal 2017 was primarily due to pricing, legal and indemnification settlements, and lower productivity benefits.

Cisco posted operating expenses of $4.7 billion (–7 percent) and operating income of $2.8 billion (–4 percent) and net income of $2.4 billion.

Kelly Lesiczka, research analyst at TBR, said a refreshed channel program expands Cisco Services’ recurring revenue streams, drives opportunities around digital solutions.

The program helps the global enterprise networking company to accelerate its expansion in next-generation solution adoption and drives recurring revenue streams.

Cisco’s acquisition activities to expand its software and “as a Service” capabilities, such the purchase of BroadSoft, a provider of cloud calling and contact center solutions, drive collaboration services opportunities for Cisco Services.

Cisco recently discontinued the Cisco Intercloud public cloud platform as part of its cloud strategy to focus on hybrid cloud and cloud professional services opportunities. Recently Cisco has tied up with Google to augment its hybrid cloud capabilities.

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