(Reuters) – Cisco Systems Inc beat analysts’ estimates for quarterly revenue and profit on Wednesday, as the network gear maker benefited from demand for its routers and switches and growth in its newer focus areas such as software.
FILE PHOTO: A logo of Cisco is seen during the Mobile World Congress in Barcelona, Spain February 27, 2018. REUTERS/Yves Herman/File Photo
Shares of the company, which also forecast second-quarter revenue largely above expectations, rose 4 percent in extended trading, putting them on track to add to the nearly 16 percent gain for the year.
Cisco pivoted to software and cyber security to cushion the impact from slowing demand for its routers and switches from companies increasingly shifting to cloud services offered by Amazon.com Inc, Microsoft Corp and Alphabet Inc instead of building their own networks.
Revenue in its application software businesses rose 18 percent to $ 1.42 billion, beating analysts’ average estimate of $ 1.37 billion, according to IBES data from Refinitiv.
Sales in its security business, which offers firewall protection and breach detection systems, rose 11 percent to $ 651 million. That fell short of IBES estimate of $ 656.4 million, but beat research firm FactSet’s estimate of $ 648.1 million.
Deals such as the $ 2.35 billion purchase of cyber security provider Duo Security in August have played an important part in driving growth in Cisco’s newer business.
Acquisitions provided an 80 basis point boost to the company’s first-quarter results year-over-year, Chief Financial Officer Kelly Kramer said on a post-earnings call with analysts.
Revenue in its infrastructure platform unit, which houses the switches and routers business, rose about 9 percent to $ 7.64 billion, topping expectation of $ 7.39 billion.
Subscriptions, which provide a more steady revenue flow, accounted for 57 percent of total software revenue in the first quarter, the company said. The share was 56 percent in the preceding quarter.
“Cisco is executing on its plan to move its business model to software and subscriptions while benefiting from a strong IT spending environment,” said Mark Cash, an analyst with Morningstar.
Cisco said tariffs were immaterial for the reported quarter, but added that the impending 25 percent duties could weigh on third-quarter results.
The company said it expects second-quarter revenue growth of between 5 percent and 7 percent from a year earlier. This implies a range of between $ 12.48 billion and $ 12.72 billion, while analysts were expecting $ 12.53 billion.
For its first quarter ended Oct. 27, the company reported an adjusted profit of 75 cents per share, above the average estimate of 72 cents.
Total revenue rose 7.7 percent to $ 13.07 billion, topping estimate of $ 12.87 billion. However, the company said deferred revenue fell 9.4 percent to $ 16.81 billion.
Reporting by Akanksha Rana in Bengaluru; Editing by Sriraj Kalluvila
(Reuters) – Shares of Cisco Systems Inc and other network equipment makers fell on Friday after a report that Amazon.com Inc’s cloud services business was considering selling its own network switches to business customers at much lower prices.
FILE PHOTO: Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo
Cisco’s shares were down 5 percent, wiping off nearly $ 11 billion from its market capitalization. Shares of Juniper Networks Inc and Arista Networks Inc fell 4 percent as investors feared that Amazon’s scale and pricing power could disrupt the sector.
The report comes days after Amazon sent shockwaves across the drug retailing sector with its move to buy small online pharmacy PillPack.
The networking devices will consist of open-source software and unbranded hardware known as “white-box” switches and come with built-in connections to AWS cloud services, such as servers and storage, the Information said.
Amazon Web Services could price its white-box switches 70-80 percent less than comparable switches from networking giant Cisco, the report said, citing one of the people with direct knowledge of the unit’s plan.
“If true, we think this would be a notable negative for the networking equipment space going forward,” RBC Capital Markets analyst Mitch Steves wrote in a note.
AWS expects to launch the switches for sale within the next 18 months, according to the report.
Amazon and Juniper did not immediately respond to a request for comment. Cisco and Arista declined to comment.
Reporting by Arjun Panchadar in Bengaluru; Editing by Arun Koyyur and Saumyadeb Chakrabarty
(Reuters) – Network gear maker Cisco Systems Inc (CSCO.O) is pulling all online ads from YouTube due to fears of the ads appearing on sensitive content on the platform, Cisco’s chief marketing officer, Karen Walker, said in a blog on Wednesday.
A logo of Cisco is seen during the Mobile World Congress in Barcelona, Spain February 27, 2018. REUTERS/Yves Herman
The blog, which seemed to have been removed from Cisco’s website on Thursday, said the company would not like its ads to “accidentally end up in the wrong place, such as on a streaming video with sensitive content,” adding that the network gear maker will continue to use YouTube as a platform to share Cisco’s video content.
Alphabet Inc’s Google (GOOGL.O), which owns YouTube, said it has partnered with advertisers to make changes.
“We have partnered with advertisers to make significant changes to how we approach monetization on YouTube with stricter policies, better controls and greater transparency. We are committed to continuing this dialogue and getting this right,” a Google spokesperson told Reuters.
Cisco’s action follows a CNN report cnnmon.ie/2jOhAXZ in April that said ads from over 300 companies, including Cisco, ran on extremist channels on YouTube.
The companies may have unknowingly helped finance some of these channels through the advertisements they paid for YouTube, according to the CNN report.
Cisco did not respond to a request seeking comment on the blog’s removal from its website.
YouTube said in a report released last month that it had deleted about 5 million videos from its platform for content policy violations in last year’s fourth quarter before any viewers saw them.
Reporting by Kanishka Singh in Bengaluru; Editing by Leslie Adler
More than 840,000 Cisco networking devices from around the world are exposed to a vulnerability that’s similar to one exploited by a hacking group believed to be linked to the U.S. National Security Agency.
The vulnerability was announced by Cisco last week and it affects the IOS, IOS XE, and IOS XR software that powers many of its networking devices. The flaw allows hackers to remotely extract the contents of a device’s memory, which can lead to the exposure of sensitive information.
The vulnerability stems from how the OS processes IKEv1 (Internet Key Exchange version 1) requests. This key exchange protocol is used for VPNs (Virtual Private Networks) and other features that are popular in enterprise environments.
The Internet of things is no good without a way to act on the data it generates. A new partnership between two of the biggest IoT players promises to put smart collection and advanced analysis of data right where it’s needed.
IBM and Cisco Systems have worked out how to run components of IBM’s Watson IoT analytics on Cisco edge devices. This will bring more intelligence closer to where the action is, helping enterprises run things like factories and oil rigs more efficiently.
In 2014, Cisco unveiled small routers and switches that could be embedded in facilities and vehicles located far from any data center. The devices could take in data from local sensors and analyze it on site with a small, built-in Linux computer. Among other things, this “fog computing” system could decide what data was interesting enough to send to the cloud and what could just be thrown away.
Cisco, which kicked off 2016 with news that the leader of its engineering troops would soon be leaving the company, has now undertaken a major reorganization of that same group and disclosed another high-profile departure.
The company announced internally that the moves, designed to better align engineering with Cisco business priorities under new-ish CEO Chuck Robbins, include the exit of 18-year veteran and Service Provider leader Kelly Ahuja. Cisco did not say where Ahuja might be headed, but did say he will be replaced by Yvette Kanouff, who will lead an expanded Service Provider organization. Kanouff joined Cisco in 2014 from Cablevision and has been Cisco’s SVP and GM, Cloud Solutions.