Cisco revenue up 5% thanks to costly acquisitions

Enterprise networking supplier Cisco has reported second quarter revenue of $12.4 billion (+5 percent) and net income of $2.8 billion or $0.63 per share.
Cisco cybersecurity solutionsCisco generated Q2 revenue of $7.352 billion (+5 percent) from Americas, $3.223 billion (+5 percent) from EMEA and $1.872 billion (+3 percent) from Asia Pacific including Japan, China and India.

Cisco had solid business in India in the previous quarter. Revenue from BRICS region rose 2 percent during the recent quarter. Cisco does not reveal its India revenue.

“We’ve had some big build outs in India. India slowed a little bit for us but we are quite positive. Russia was slightly negative. Mexico was positive. China was roughly flat for the last quarter,” Chuck Robbins said.

Cisco generated revenue of $7.128 billion (+6 percent) from infrastructure platform that sells switches and routers, $1.465 billion (+24 percent) from applications software businesses, $658 million (+18 percent) from networking security business and $3.173 billion (nil growth) from services.

San Jose, CA-based Cisco today said it is expecting 4-6 percent increase in the revenue implying a range of between $12.96 billion and $13.21 billion in the third quarter of fiscal 2019.

Cisco has made several acquisitions including Luxtera, a semiconductor company and Singularity Networks, a network infrastructure analytics company, to bolster its revenue streams and capabilities.

Cisco has revealed there was 140 basis point positive impact on revenue from its acquisitions. Cisco acquired technology companies such as BroadSoft, Duo, Stealthwatch, among others.

Chuck Robbins, who took the helm in July 2015, has made acquisitions a central part of his efforts to add muscle to the hardware giant’s newer growth areas such as the cloud, internet of things and cyber security.

Under Robbins, Cisco has pivoted to software and cyber security to make up for slowing demand for its routers and switches as companies increasingly shift to cloud services offered by, Microsoft and Alphabet instead of building their own networks, Reuters reported.

“Strong growth in areas like security and software-defined networking are indicative of Cisco staying a leader in nascent technologies and possibly turning into more spend per customer or opening up new opportunities,” Morningstar analyst Mark Cash said.

Rajani Baburajan

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