Cisco Has Strong Quarter Despite Drops in Switch, Data Center Spending
Growth in such businesses as collaboration, security and routing offset declines in switching and data center products caused by macroeconomic issues.Cisco Systems officials were able to pull together a strong financial second quarter despite strong competition and a volatile global economic environment while at the same time continuing to rapidly evolve the company's business model. Cisco on Feb. 10 announced that during the last fiscal quarter, revenue jumped 2 percent over the same period in 2014, to $11.8 billion, while net income, at $2.9 billion, increased 8 percent. This was accomplished despite a microeconomic picture and instability in the global markets that hurt sales in some of Cisco's business areas, including network switches—particularly in its campus business—and the data center. However, Cisco saw strong growth in other areas, including routing, collaboration, security, service provider video and its cloud-based businesses, according to CEO Chuck Robbins. The fact that Cisco was able to offset slowdowns in some of its key businesses with growth in several newer areas is an indication that its efforts over the past several years to expand beyond its networking roots into a wide range of areas—including the Internet of things (IoT), security, collaboration and the cloud—is taking hold. It's an initiative that Cisco is pursing both through in-house development as well as an aggressive acquisition strategy. Most recently, the company last week announced it is buying Jasper Technologies for $1.4 billion, a move officials said will enable Cisco to offer customers a more complete IoT portfolio.
"Our portfolio is more strategic than ever to companies and countries that are digitizing everything," Robbins said during a conference call with analysts and journalists. "As billions of things become connected, creating massive amounts of data, Cisco is playing an increasingly critical role, enabling our customers to drive their priorities with industry-leading security. Cisco is unique in our ability to connect everything for our customers, from the sensor to the data center, with security and analytics. As a result, our conversations are no longer just in IT. They have become prevalent in the C-suite and the boardroom."