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Cisco hits the disco as unified comms, wireless sales are lookin' frisk, yo

Emboldened Borg sneers at white box switch menace, gloves up for VMware fight

Just watch that elephant dance: Cisco believes it's managed something Silicon Valley startups often die trying to do, “pivoting” the business to reverse a downward trend.

CEO John Chambers sounded cat-swallowed-cream pleased during The Borg's Q2 2015 results call, and investors agreed, adding five per cent to the company's share price in extended trading.

Chambers was most bullish about how Cisco's most recent products are performing – kit like the Nexus 3000 and 9000, its Application Centric Infrastructure (ACI), and its UCS data centre products – saying that having “disrupted ourselves” a year ago to launch the new iron, “we have our stakes in the ground … and are well on the way to becoming the number one IT company in the world.”

Q2 2015 revenue for Cisco was up seven per cent to US$11.9 billion, split US$9 billion to product and US$2.9 billion to services for a net income of US$2.745 billion.

Its best performance was at home in the Americas, where US$400 million of new quarter-on-quarter cash arrived, while Europe, the Middle East and Africa (EMEA) was nearly static at US$3.091 billion, as was the Asia Pacific, Japan and China (APJC) at US$1.744 billion.

Year-on-year, the Americas rose eight per cent, EMEA seven per cent (with growth even in the depressed southern Europe), while APJC dipped six per cent.

"We saw phenomenal execution in the UK, up 17 per cent, Germany up 12 per cent, and something no one else in the industry is coming even close to Southern Europe actually grew 20 per cent year-over-year," said Chambers on a conference call last night.

Emerging markets remain a thorn in Cisco's side: in China “we continue to see challenges”, Chambers said, as was Russia. India was a bright spot, up 11 per cent year-on-year, and Mexico put on 21 per cent year-on-year.

In segment terms, global enterprise was up 10 per cent year-on-year, and American public sector grew 17 per cent. The global service provider business is still difficult and shrank by one per cent year-on-year.

Chambers remarked that the US net neutrality debate is putting a brake on service provider spending plans, and that along with emerging markets, that segment will be “continuing to provide negative drag for the next few quarters” [his double-negative, not The Register's].

Let's take a look at performance by product segment:

  • Switching – up 11 per cent year-on-year to US$3.6 billion (Chambers said not to expect double-digit switching growth in the long term);
  • NGN routing – two per cent growth to US$1.76 billion;
  • Collaboration – put on four per cent to US$990 million;
  • Data centre – sprinted 40 per cent ahead to US$776 million;
  • Wireless – up 18 per cent to US$661 million;
  • Security – put on six per cent to US$416 million;
  • Services – up five per cent to US$2.86 billion;
  • Service provider video – declined 19 per cent to US$776 million.

Chambers may be less brash than in the 1990s, but he's still happy (as long as various supporting suits let him) to drop buckets on the competition as it suits.

Today he acknowledged the emergence of the white-box switching market, for example, but believes that Cisco's work on integrating security into its business is what matters.

“You can get merchant silicon and throw software on top of it, and run data centres and run WANs … all it takes is one breach and you've done more damage to your brand, as a company or as a government, than you could get in a hundred years of saving on a little bit of switching.”

Chambers reiterated Cisco's commitment to its silent partner status in its lovechild with EMC, VCE, saying “we have a very good relationship with EMC and expect that to continue.”

VMware is a different matter: “we're going to beat them as a competitor and have fun doing it,” Chambers said. ®

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