Cisco Posts Record Quarterly Revenue

Last week, for the eighth consecutive quarter, Cisco reported record quarterly revenue. This has been referred to as "a milestone," according to the CEO of the company, John Chambers, and indicates that the company is surely on the right path to become the leading IT company in the world.

Cisco performed better than was expected by Wall Street's estimates, and in its second fiscal quarter reported profits of $3.1 billion, an increase of 44 percent compared with the same quarter in the previous year. $12.1 billion was also reported in revenue by the company, an increase of five percent, year over year.

The majority of the growth comes as a result of Cisco's Data Center business, which had increased by 65 percent year over year, its wire segment, which was up 37 percent, and its video segments, which grew 20 percent.

The smallest growth of three percent year over year was recorded in the company's switches segment, and the security segment was up by only one percent. There was a decline of six percent in the routers segment, compared to the same period last year, and the collaboration unit offered by the company - which ranges over both unified communications (UC) and telepresence solutions - fell again, this time by 11 percent.

In total, the revenue measured by Cisco's product segment had risen by 3.5 percent, and the revenue from its services segments had grown by 10 percent.

According to Chambers, the transitions which have been introduced by Cisco (which he outlined in October when commenting on the company's plan to transform from the world's incumbent communications vendor to the world's top IT player), are proving advantageous to the company.

Chambers said: "Looking forward, most of the market trends are playing toward our strengths and where we have made our most significant strategic investments."

In particular, three trends are key to instigating Cisco's growth, according to Chambers. The increase in the usage of mobile devices will enrich demand for more robust networking and data solutions, and therefore mobility is very important.

Secondly, programmable and application-centric networks are steadily increasing in importance, and this is a market segment which Cisco has slowly been investing in.

Furthermore, the "Internet of Things" trend (ie. the growing number of objects hosting embedded sensors for wireless communication) is also well aligned with Cisco.

A Piper Jaffray report outlines that partners of Cisco are also feeling optimistic with regard to the future. Many partners anticipate a growth - or to remain steady - in their Cisco businesses, this year. According to the research report, 25 percent of the VARs surveyed stated that Cisco businesses were "above plan" and 63 percent said they were "in-line with the plan." However, 13 percent said that the business was "tracking below."

According to the Wall Street Journal, Cisco's shares, which are up 25 percent in the last three months, closed up 0.8 percent to $21.14 just before the close of the market last Wednesday. (CY) Link