Cisco Rides UCS Sales to Strong Quarterly Earnings Report

Unified Computing System helps world's No. 1 IT networking provider to $11.5 billion in sales for its second fiscal quarter, up 11 percent from the same period in 2010.

Bolstered in large measure by increasing sales of its Unified Computing System data center equipment, Cisco Systems revealed encouraging financial results that exceeded Wall Street analysts' projections for the third straight quarter.

San Jose, Calif.-based Cisco, still the world's No. 1 IT networking provider, on Feb. 8 reported sales of $11.5 billion for its second fiscal quarter, up nearly 11 percent from the same period in 2010. Profits escalated a whopping 43 percent to $2.2 billion. Earnings totaled 40 cents per share.

Wall Street analysts polled by the Thomson Reuters news service had written that Cisco would report earnings of 34 cents a share on revenue of $11.2 billion.

Chairman and CEO John Chambers told analysts and journalists on a conference call that the company still faces challenges from "an uneven world economy and constrained government spending." But Chambers said that sales improved in nearly all product categories during the quarter that ended Dec. 31.

In contrast, market competitor Juniper Networks had some of its biggest customers cut back their networking budgets, Chambers said.

Background on UCS

Cisco's UCS is a preconfigured, snap-together system (well, there is some wiggle room for customization, but not much) consisting of its own proprietary data center architecture, server, and management software and services. The servers run on Intel's quad-core Nehalem Xeon processors and can be upgraded as needed. The system is modular and very scalable.

EMC and its archenemy, NetApp€”both friends of Cisco€”provide the storage capacity. BMC is providing the provisioning, change-management and configuration software in the stack. VMware and Microsoft virtualization layers are sanctioned, and Accenture helps shape the individual product solutions for customers.

One year after it started shipping its partner-powered Unified Computing System in July 2009, Cisco Systems announced that it had 1,000 installations processing data workloads in climate-controlled IT centers.

That number alone is noteworthy, because these are not trivial data center units. They require more than a modicum of thought, planning and investment, and most being in the mid-six-figure price range, they are certainly not inexpensive. In fact, many of them are million-dollar-plus installations.

As of Jan. 18, 2012€”less than three years after the March 16, 2009, introduction of the UCS€”the world's No. 1 Internet pipefitter is proclaiming that it now has 10 times that many installations in production. Ten thousand sales of anything IT, especially as big as these things are, is very impressive.

UCSes are being used to power virtual desktop systems with thousands of users, ATMs, video surveillance systems, hospital X-ray imaging archives, science and military installations€”in other words, any and all types of data centers.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...