& cplSiteName &

Cisco Execs on Trump: Cautiously Optimistic

Mitch Wagner
11/17/2016
50%
50%

On an earnings call Wednesday, Cisco's CEO and CFO expressed cautious optimism about the outlook for the company and business economy in general under Donald Trump's administration.

Following the US Presidential election, most CEOs are "pragmatic" and want to see how the incoming Donald Trump administration shapes up regarding business policy, CEO Chuck Robbins said.

He added, "I think that President-elect Trump appears to be business-oriented and is focused on driving the economy. And anytime the US economy improves seems to be good for us."

But he added, "I think there's consternation around the world related to the political environment and a little bit of wait-and-see."

CFO Kelly Kramer noted that Trump has said he will make a priority, in his first 100 days in office, out of providing incentives for businesses to repatriate foreign funds to the US. Kramer said she is "encouraged" but they "don't know details."

Cisco could use the money for stock buybacks, debt service, M&A or strategic investments, and will listen to investors on making decisions, the CFO said.

If recent feelings of optimism about the economy continue, it will "lift all boats," Kramer said.

As for the earnings: Weak service provider demand kept Cisco revenues down, as the company reported modest 1% year-over-year quarterly growth to $12.4 billion revenue on Wednesday. (See Cisco's Kanouff: Service Providers Squeezed Between Demand & Revenue.)

Service provider orders declined 12% year-over-year, which "largely" drove overall product order decline of 2% year-over-year, offset by a 7% increase in service revenue, Robbins said on the company earnings call Wednesday market close.

The company is progressing from a product-sales business model to a model that emphasizes recurring revenue, demonstrated by 48% year-over-year growth in product deferred revenue related to recurring software and subscriptions, Robbins said.

Robbins sees that shift as part of a global trend -- many companies that now sell products will transition to providing services that generate recurring revenue. (See Cisco's Robbins: With IoT & Cloud, Services Beat Products.)

In August, Cisco laid off 5,500 positions, 7% of its workforce, as part of an ongoing shift to recurring, software-based revenue models and the cloud. (See Cisco Throws 5,500 Overboard on Cruise to Richer Waters.)

Robbins identified future growth areas as security, collaboration and Application Centric Infrastructure (ACI), its SDN technology.

Robbins attributed weak demand to "overarching macro uncertainty in the economy" and "political and regulatory environments that are somewhat uncertain in the US and throughout the world."

Robbins said he did not know when to expect service provider demand to pick up. He said service providers haven't paused spending directly related to the election, but they are hesitant because the regulatory environment is in flux. (See Nokia Reserves Judgment on Trump and Blond Buffoon a Worry for Telecom Vendors.)

Non-GAAP net income was $4.1 billion, or $0.61 per share in the first quarter of fiscal 2017, which ended on October 29.

A UBS analyst questioned whether problems with private cloud implementations could harm Cisco. He said experts at a recent panel at one of his company's conferences said that private cloud isn't working at many companies, which are going to the public cloud instead. If the private cloud declines, that could mean trouble for Cisco and other companies reliant on selling on-premises equipment, he said.

But Robbins was upbeat. "Over the next year to two years, a lot of the complexity in building out private infrastructure and private cloud for our customers will be alleviated," he said. The whole industry will "focus on bringing automation and operational relief to customers," he said. "That level of simplicity and those capabilities will improve."


Are you a service provider executive who wants to learn more about the impact of web-scale competition on the communications sector? Join us for Light Reading's third annual 2020 Vision Executive Summit taking place in Rome, December 6-8. Contact our events team to find out if you qualify for a VIP pass.


Robbins noted that customers of Cisco's ACI platform are cutting-edge, and therefore representative of hybrid cloud implementers. ACI grew 33% year-over-year to a $3 billion run rate, he said.

In other business areas: Security revenues were up 11% year-over-year, next-generation (NGN) routing was up 6%, while switching was down 7%. Collaboration and data center each deceased 3%, and wireless and service provider video each decreased 2%, Cisco said.

For the second quarter, Cisco expects a 2-4% revenue decline, normalized to exclude the service provider video CPE business, which Cisco sold on November 20, 2015. Non-GAAP earnings per share will be $0.55-0.57, the company said.

Related posts:

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Gabriel Brown
50%
50%
Gabriel Brown,
User Rank: Light Sabre
11/18/2016 | 10:13:04 AM
Re: Time will tell
You post sounds like a Britisher's lament, wanlord (apart from the Mexico part).

In reality, America probably makes loads of complex physical stuff -- planes, machines*, computers, Teslas, SnapChat Sun Glasses, etc.

 

*all kinds of complex, high-value ones
telecomuser
50%
50%
telecomuser,
User Rank: Lightning
11/18/2016 | 9:37:56 AM
huh
x
wanlord
50%
50%
wanlord,
User Rank: Light Sabre
11/17/2016 | 7:55:11 PM
Re: Time will tell
Robotics and Automation, AI, etc. is what is going to be taking jobs, not making cars in Mexico. We lost this battle when Japan started making better cars. We suck at making physical stuff now, so focus on technology and not trying to get us back to the 1950's.

 

 
Kelsey Ziser
50%
50%
Kelsey Ziser,
User Rank: Blogger
11/17/2016 | 5:31:26 PM
Time will tell
I heard on NPR yesterday that the value of the dollar recently went up which will actually make it harder for Trump to bring manufacturing jobs back to the US like he hoped.

It'll be interesting to revisit this topic later next year - will most CEO's be "cautiously optimistic" in Q3 2017?
Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue London
November 10, 2017, The Westin Times Square, New York, NY
November 16, 2017, ExCel Centre, London
November 30, 2017, The Westin Times Square
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Is US Lurching Back to Monopoly Status?
Carol Wilson, Editor-at-large, 10/16/2017
Pai's FCC Raises Alarms at Competitive Carriers
Carol Wilson, Editor-at-large, 10/16/2017
The Big Cable DAA Update
Mari Silbey, Senior Editor, Cable/Video, 10/11/2017
Muni Policies Stymie Edge Computing
Carol Wilson, Editor-at-large, 10/17/2017
'Brutal' Automation & the Looming Workforce Cull
Iain Morris, News Editor, 10/18/2017
Animals with Phones
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed