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Cisco issued a warning last night that its Q4 revenues would be lower than expectations and profits would be hit by a $1.1b ‘restructuring’ plan. Shares fell c3% in after-hours trading.
Cisco is often used as a bellwether but I think it is more another example of our well used ‘Diversity of Performance’ theme. The networking market is doing OK right now and, indeed, is one of the beneficiaries of the ‘move to Cloud’. Competitors like Juniper Networks are doing fine. It’s Cisco’s execution and market focus that is at fault and, at least, John Chambers now seems to be tackling that.
Even within Cisco, the ‘Diversity of Performance’ is marked. Sales into Government agencies thoughout the world were down a massive 8% - showing that the UK is not the only public sector market in distress. Conversely, Cisco’s video conferencing sales were up 39%. I well remember Ovum’s very first report in 1985 was to predict the takeoff of the video conferencing market. Everything eventually comes to analysts who wait! Cisco’s wireless products were also up 32%.
