Cisco to Cut 6,000 Jobs as Transformation Continues
Cisco late last year unveiled its Application Centric Infrastructure (ACI) initiative to address the demand for more software-defined data center solutions, and the company last month announced it would start shipping its Application Policy Infrastructure Controller (APIC) and other parts of the ACI portfolio at the end of July. During the conference call, Chambers said the company is seeing a lot of interest in ACI and the Nexus 9000 switch, which is at the heart of Cisco's SDN efforts. By the end of the quarter, the vendor had 580 Nexus 9000 customers. Chambers pointed out other areas where Cisco is growing. The data center business saw revenues jump 30 percent, and the UCS solution now has 36,500 customers and a run rate of $3 billion, and has driven Cisco to the top of the list of x86 blade server vendors in the United States. Security revenues increased 29 percent, and the company is getting a lot of interest in its Intercloud strategy, which officials have described as a series of interconnected private, public and hybrid clouds that run atop Cisco infrastructure. The company in May announced it will invest $1 billion in the effort over the next two years, and its partnering with other companies—such as Microsoft—to further its cloud ambitions. Such efforts in new products and high-growth areas will help drive Cisco's sales growth in the future, according to Scott Dennehy, senior analyst with Technology Business Research. "Cisco remains focused on its long term growth strategy, investing in high growth areas such as cloud, security, and SDN, even though the investments may not bear fruit in the short term," Dennehy wrote in a research note. "For example, the company added 2,000 employees to its Intercloud division over the past four quarters, but it will be several years before Intercloud contributes to Cisco’s revenue in a meaningful way."
At the same time, Cisco continues to try to shore up struggles in such areas as collaboration and in emerging markets, such as the BRIC (Brazil, Russia, India and China) regions. The networking vendor saw 2 percent revenue growth in both the Americas and the Europe, Middle East and Africa regions, but the Asia-Pacific region saw sales decline 7 percent.