Macro-Economic Woes Still Hurting Cisco

A week removed from the company's datacenter-focused Application-Centric Infrastructure (ACI) announcement, Cisco said in its fiscal first-quarter 2014 earnings report that two other relatively new hardware platforms are performing below expectations.

Cisco Systems Inc. (Nasdaq: CSCO) chairman and CEO John Chambers said on its quarterly earnings call Wednesday afternoon that its NCS routing platform and its CSR-X core switching platform, both of which he likened to ACI as new hardware for their respective segments, are experiencing slower growth than expected because of the testing and other implementation hurdles that typically greet new hardware.

Only time can determine whether ACI will experience the same kind of slowness. Shipping of the new platform will gear up in the coming months. What is clear is that, though Cisco is doing gangbusters business in the datacenter market with switching and computing solutions, the broader economic environment continues to vex the networking vendor.

The company reported only a 2 percent increase in total revenue from a year earlier to $12.1 billion. Chambers said the federal government shutdown and sagging international markets played a role in Cisco missing its own revenue expectation of 3-5 percent growth. "We continue to deal with a macroeconomic environment that is inconsistent and very hard to read."

Despite 44 percent growth in revenue from datacenter computing and 3 percent growth in datacenter switching, the company reported that service provider orders declined 13 percent during the quarter; ordering was soft across the board geographically.

Cisco also announced a $15 billion increase in its stock repurchasing program, which already stood at about $82 billion.

— Dan O'Shea, Managing Editor, Light Reading

DOShea 11/14/2013 | 8:52:46 PM
Re: NSA impact - lasting impact? I don't know about the true amount of NSA ripple effect. It might just be a convenient excuse. Maybe I'm naive about this, but do service providers and business customers on other countries decline to buy American every time the US is linked to scandal? If that's the case, how did Cisco survive the last decade?
[email protected] 11/14/2013 | 10:22:14 AM
NSA impact - lasting impact? More of the reporting I am seeing today is highlighting that Cisco has also suffered from a NSA snooping backlash.... if that is true then is that impact going to lessen in time? 
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