Cisco's Quarter and the RecoveryCisco's Quarter and the Recovery
Unified Communications was up, including IP phones (!), but the big winner was...switches.
May 13, 2010
Unified Communications was up, including IP phones (!), but the big winner was...switches.
The headline out of Cisco's fiscal 3Q report was the 27% Y/Y revenue growth, to $10.4 billion, with profits up 63%, and the assertion that "From almost every measurement perspective, the quarter was probably the strongest quarter in our history."Before getting to the Cisco Unified Communications portfolio, which falls under the company's "Advanced Technologies" heading, one statistic ought to give HP, Avaya, and all the other would-be data competitors pause: Not counting the small "Other" category, Cisco's biggest percentage growth was in its biggest overall category--and that category is "Switches." The $3.7 billion revenue from Switches in the quarter represented a 40% Y/Y increase.
Nevertheless, Cisco also acknowledged cutting prices in the increasingly-competitive data networking market.
Unified Communications revenues were up 26%, with strong 50% Y/Y growth in TelePresence. The company reported that Bank of America will deploy 200 TelePresence systems, and an unnamed "emerging country's government social services system" ordered 250 systems.
Oh, and you know how we're always talking about the death of the desktop phone? Well, according to Cisco CEO John Chambers in the call, "our IP phones had order growth of approximately 57%." So maybe reports of that death has been, as they say, greatly exaggerated, or at least very premature (Mark Twain did, eventually, die).
Cisco's stock has actually fallen today, as apparently some analysts were expecting even better projections for future quarters.
As for what Chambers expects to see from enterprise customers going forward, in general terms:
I'd say now, almost without exception, most people are beginning to slowly turn cautiously optimistic. They are very hesitant about adding headcount especially in the U.S. However, almost all of them have squeezed their expense levels down, have tightened things, probably cutting into muscle at times. And so they're looking as they want to grow new revenues, move into new markets about driving productivity and technology. It's a nice way of saying that I think you're going to see the optimism in the technology industry continue throughout the next year. And that most of our customers we talk to our now getting very much involved with how they drive productivity, how they move into new markets, et cetera, as opposed to focus on cutting expenses
Unified Communications was up, including IP phones (!), but the big winner was...switches.
