Cisco: We're Not Talking
“You have to have some sympathy for Cisco,” says Stephen Kamman, executive director with CIBC. “When they sneeze the whole world gets a cold, so they have to be very careful about what they say in public.”
Jayshree Ullal, a vice president at Cisco, played to a packed house. But by the time she started rehashing the demise of the old packet-centric network and the rise of data in carrier networks, several people in the audience had already buried their noses deep in the Wall Street Journal. Others yawned as she then launched into a list of current Cisco product offerings.
“Let’s just say I didn’t learn anything new from this,” said one investor after the presentation, asking to remain unnamed. “But it was bland for a reason. I’m sure John Chambers would have had her head if she said anything material.”
Unlike executives from Foundry Networks Inc. (Nasdaq: FDRY) and Extreme Networks Inc. (Nasdaq: EXTR), who presented at the conference yesterday, Ullal did not indicate that spending has picked up in the current quarter (see Extreme, Foundry Get Happy ). In fact, she seemed to avoid questions on the issue and only gave investors vague answers regarding the length of the sales cycle.
Even though she was not willing to give specifics, Ullal was still optimistic about the long-term prospects for the company, and she highlighted some markets where she expects future growth -- namely, optical networking in the metro area, edge routing, and storage area networking.
“Carrier spending trends haven’t gotten worse, but they haven’t gotten a whole lot better, either,” she said. “The opportunity remains large, even though we don’t have much visibility into the marketplace right now.”
While Ullal said there would be tremendous growth in edge routing, she seemed to downplay the core routing opportunity. This is not surprising, considering that the company has consistently lost market share to Juniper Networks Inc. (Nasdaq: JNPR) over the past year, said CIBC’s Kamman.
“Cisco seems to be emphasizing the edge router market, where they are stronger,” said Kamman. “I think that is the correct thing for them to do.” Nevertheless, he disagrees with Ullal about the market potential in the core:
“I think the core router market is going to come back, simply because volume on the demand side is growing tremendously. And once broadband gains critical mass in the consumer market, we’ll see a huge need for core routing equipment.”
Cisco was trading down 0.97 (4.76%) at $19.40 a share in midday trading.
- Marguerite Reardon, Senior Editor, Light Reading