Menu
Network spending still hampered by economic jitters, Cisco says

Network spending still hampered by economic jitters, Cisco says

The company's sales grew slightly in the last quarter

Economic uncertainty is still putting a damper on some network spending, and that won't change in the next few months, Cisco Systems said Wednesday.

The dominant networking vendor reported slightly higher sales for the three months ended April 30 but said enterprises remained cautious about replacing LANs that still work. That continues a trend the company identified in February, the last time it posted financial results.

At that time, Cisco cited January's stock-market fluctuations. Stocks have regained ground since then, but orders for campus network gear haven’t rebounded, CEO Chuck Robbins said Wednesday. Overall switching revenue was down 3 percent in the quarter.

What’s more, Cisco doesn’t expect any improvement during the current quarter that ends in July. Robbins cited factors like the political upheaval in Brazil and caution around an upcoming vote on Britain leaving the European Union, a move Cisco opposes.

“We do see a continuing amount of uncertainty out there,” he said.

Another downward economic trend actually helps acquisition-hungry Cisco: Startup valuations are coming back down to Earth. The company has recently snapped up companies like Jasper Technologies, Acano and CliQr at a faster pace than usual. Its buyouts will probably slow down in the coming months, but Cisco’s still looking for companies that fit, Robbins said.

Webscale companies -- the likes of Google and Facebook -- are a bright spot for Cisco’s switching business. Those cutting-edge outfits keep expanding their huge data centers and adopting automation to cut costs, Robbins said. They’re choosing Cisco switches despite their supposed affinity for generic “white box” gear – though Cisco declined to say how much of Cisco’s business comes from webscale customers – and enterprises’ data centers will look like theirs in the future, Robbins said.

Cisco’s model for future networks is its Meraki division, which sells network gear with cloud-based management and policy. Meraki’s sales are growing in double digits.

“We see a path to deploying that model across the rest of our portfolio,” Robbins said. That’s part of the company’s push to rely less on selling hardware and more on delivering software and services, which generate ongoing revenue.

For the quarter, Cisco reported revenue of $12.0 billion, up 3 percent year over year, and profit of 2.3 billion, down slightly. For the current quarter, it expects revenue to be flat or up as much as 3 percent.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Slideshows

Top 50 defining moments of the New Zealand channel in 2016

Top 50 defining moments of the New Zealand channel in 2016

Reseller News looks back on a tumultuous 12 months for the New Zealand channel, assessing the fallout from a year of sizeable industry change. Whether it be local or global mergers and acquisitions, distribution deals or job changes, the channel that started the year differs somewhat to the one set to finish it - Reseller News assesses the key moments that made 2016.​

Top 50 defining moments of the New Zealand channel in 2016
​Hewlett Packard Enterprise honours high achieving NZ channel

​Hewlett Packard Enterprise honours high achieving NZ channel

Hewlett Packard Enterprise honoured its top performing Kiwi partners at the second running of its HPE Partner Awards in New Zealand, held at a glitzy ceremony in Auckland. Recognising excellence across eight categories - from distributors to resellers - the tech giant celebrated its first year as a standalone company, following its official split from HP in 2015.

​Hewlett Packard Enterprise honours high achieving NZ channel
Nutanix treats channel partners to Christmas cruise

Nutanix treats channel partners to Christmas cruise

Nutanix recently took to the seas for a Christmas Cruise around Sydney Harbour with its Australia and New Zealand staff, customers and partners to celebrate a stellar year for the vendor. With the sun out, they were all smiles and mingled over drinks and food.

Nutanix treats channel partners to Christmas cruise
Show Comments