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Chuck Robbins has been CEO of Cisco Systems only since July 26. But despite his rookie status, he’s the man in charge now that longtime leader John Chambers has moved to the boardroom.
At the first earnings conference over which he presided, Robbins got off to a good start with investors Aug. 12 when he was able to announce that the networking giant’s sales had risen 4 percent to $12.8 billion in fiscal Q4 compared to the same period a year ago.
Oh yes, and investors also were delighted to find out that the company’s profits had increased 3.2 percent to $2.3 billion. So the news was pretty much all good on the bottom lines for the San Jose, Calif.-based IT giant, and Robbins now can breathe a sign a relief.
One down, many more earnings calls to go. The pace never stops in the publicly held corporate world.
“I’m stepping into the CEO role at an incredibly exciting time for Cisco,” Robbins said. “We closed out our fiscal year with record revenues. I’m particularly pleased with the strong growth of deferred revenue, which shows we are very effectively driving our business to a more predictable software-based business model, at the same time as [we are] growing revenues and earnings.
“These strong results show what we are capable of when we’re focused, and you can expect us to continue to drive the evolution of our portfolio to maximize the value we bring to customers in today’s rapidly changing market. The network’s strategic role at the center of everything becoming digital—today and in the future—is why I strongly believe Cisco’s best years are ahead of us.”
Cisco’s total gross margin and product gross margin were a healthy 62.1 percent and 61.0 percent, respectively.
“It certainly helped Robbins that Cisco set expectations that it could easily beat to make Robbins’ first few weeks on the job look successful,” Jayson Noland, an analyst with Robert W. Baird & Co, said in an interview with Bloomberg News.
Not all the news was rosy. The company recorded only single-digit growth in areas in which the company has been investing heavily, such as security. For example, Cisco acquired networking security startup OpenDNS in June for $635 million, and it is far too early to see any results from that transaction. But other security divisions in the company performed only adequately.
Robbins said he expects growth in security software to reach double digits in the future, and that Cisco’s transition to more cloud-based services in place of hardware appliances is simply going to take some more time.
“Software is now 47 percent of our security portfolio,” Robbins said on the call. “So I think it’s a transition that we’re pushing.”
Investors reacted to Cisco’s results; the stock price went up 4 percent in after-hours trading to $28.98 from $27.90.