Feeds

Cisco boosts sales and profits despite softness in switching and routing

Servers and video help fill in the gaps

Bridging the IT gap between rising business demands and ageing tools

Cisco Systems took a big bet more than four years ago when it jumped into the server market with its Unified Computing System blade and rack servers and started peddling converged Nexus switches at the same time. Those bets have paid off, and rising sales of these products are filling in the revenue gaps in the quarter ended in April as switch sales are down and router revenues are flat.

In Cisco third quarter of fiscal 2013, product revenues were $9.56bn, up 5 per cent, and services revenues were $2.66bn, up 7 per cent. Research and development costs were on the rise, but Cisco kept a lid on other costs and therefore was able to boost net income by 14.5 per cent to $2.48bn.

The company boosted its dividend by 3 pennies to 17 cents a share in the quarter and paid out $1.8bn for dividends and share buybacks in the quarter and still ended up with $47.4bn in cash and equivalents in the bank, about a billion bucks lower than a year ago thanks to acquisitions.

"Bottom line, we did what we said we would," said CEO John Chambers in a conference call with Wall Street analysts going over the numbers on Wednesday after the market closed.

Switching continued to be the main revenue driver for Cisco, but sales fell by 2 per cent to just under $3.6bn in the April quarter. Nexus converged switches, which support server and storage protocols on the same ASICs, thus simplifying network configuration and cutting the costs of linking servers to each other, to storage, and to the outside world, had double-digit growth and Chambers said there was increasing demand for 10Gb/sec and 40Gb/sec networking.

Chambers said that the data center business, which means UCS servers and integrated switching as well as some related Nexus switch sales, had a 77 per cent jump in sales in the quarter, to $515m. He said that if you add up all Nexus switching plus UCS, then this modern Cisco business had an annualized run rate of $5.5bn as the April quarter came to a close. That is a 35 per cent increase over the run rate it had a year ago.

Routers had flat sales in the quarter, at $2.14bn, but service provider video product sales were up 30 per cent to $1.3bn. Collaboration tools brought in just over $1bn in the quarter and were down a point compared to the year-ago quarter, but wireless products had a 27 per cent spike to $523m.

On a geographic basis, southern Europe continues to be a problem, said Chambers, and revenues were flat across the entire EMEA region for Cisco in the quarter. The Americas region was up 7 per cent, driven by strong sales in the US at enterprises (sales up 10 percent) and service providers (up 10 per cent as well).

Even the public sector in the United States managed to grow 5 points, said Chambers. Asia/Pacific-Japan-China had 1 percent growth, which is not all that great, but emerging markets had 13 per cent growth, more than double the growth Cisco had in its second fiscal quarter ended in January. China posted 8 per cent growth, Russia was up 16 per cent, and Brazil was up 14 per cent.

Looking ahead, Cisco expects for revenues in its fourth quarter ending in July to rise by between 4 and 7 per cent, with non-GAAP earnings per share of 50 to 52 cents per share. GAAP EPS will be 7 to 10 cents lower than that. ®

Application security programs and practises

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.