Cisco may have to speed up some acquisitions to become more software- and services-focused, and could use the pandemic to score some deals, writes tpoletti.
Cisco Systems Inc.’s earnings had a bright spot Wednesday, but the giant shadow of coronavirus blotted it out.
Cisco reported that revenue dropped 9% in the fiscal fourth quarter to $12.2 billion, and predicted that sales would continue to decline at an equal or greater rate in the current period. In response, Cisco plans to cut $1 billion in costs, a supersized return to Cisco’s previous pattern of a large restructuring at the end of a fiscal year.
Cisco’s revenue decline was led by its older networking products, with total product revenue down 13%, and declines across switching, routing, data center and wireless driven primarily by weakness in the commercial enterprise markets. Pockets of strength included the company’s more recent network and software-as-a-service offering, the Catalyst 9000, and double-digit growth in its WebEx video platform, which is seeing a surge of usage with many people working from home.
“Some of them are using this opportunity, with no one in their campus environments, to upgrade,” he told analysts on the company’s conference call.“You don’t recognize it for three years, but you are getting the revenue,” she said. “You get even more when they renew.”
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