Cisco CEO says customers are waiting but the catalysts are there

Cisco's not slowing down, but some of its customers are pausing to see what growth drivers they need to react to, and when they need to react. That's the message from Cisco CEO Chuck Robbins who, on today's earnings conference call, was upbeat about the networking giant's service provider business.

A quarter ago, Robbins said the same thing. Customers are still happy; they're still buying. They just are pausing to weigh their options or to wait for some macroeconomic issues to clear up.

How long a pause some customers will take is is anyone's guess.

Cisco posted second-quarter GAAP earnings of $0.68 on revenues of $12.01 billion and both numbers exceeded Wall Street's expectations. Still, the general slowdown in customer activity is showing up in the numbers. The company predicted a year-over-year drop in revenue of between 1.5 to 3.5% next quarter.

The company's service provider routing business is reported as part of a larger group called Infrastructure Platforms; Infrastructure Platforms brought in $6.5 billion in revenue for the quarter, down 8% year-over-year. The company's service provider customer segment was down 11% year-over-year in orders, Cisco said.

Robbins recalled December's launch of Cisco's Silicon One products and strategy as proof that Cisco was still very serious about its service provider business.

The change in architecture (and business model) for Cisco ushered in by Silicon One was that "we also announced that we would be willing to sell our silicon to go into a white box, or sell it just directly to a customer if that's how they'd like to procure it," said Robbins.

"Several [large cloud providers] were with us at the announcement in December, which shows you their belief and what we're doing," Robbins added. "We have taken orders for both [Silicon One architectures] from different cloud players."

Robbins also said Cisco had customer wins to support 5G rollouts with "over 30 customers" around the world. Some of those wins are cell site aggregation, some were backhaul and some were core infrastructure wins, Robbins said. "Most of them are in non-standalone, which means they're enhancing their current networks," he added.

By next year, Robbins said the transition to 400G and more 5G buildouts will be the key drivers for Cisco's service provider business.

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