Cisco CEO sees positive signs ahead as the company powers through the pandemic

Cisco CEO Chuck Robbins painted a picture of optimism this afternoon as the company is starting to gain some visibility into its business, which has been challenging during the pandemic.

Speaking on today's call, he said Cisco is off to a "solid start" as it wrapped up its fiscal Q1 and the company saw glimmers of improvement across its range of segments as businesses push ahead with "digital first" strategies.

Cisco, he said, is seeing "encouraging signs of improvement" following a downbeat fiscal Q4.

Robbins said many businesses are compressing years of work into just a few months as they make their way through the pandemic by outfitting home workers with their tech needs and prepare for a "hybrid" workforce that will ultimately toggle between the home and the office.

He downplayed the effects of a decline in orders on the enterprise side of the business, noting that there's been a pickup in areas such as collaboration tools and security. He said that customers are expected to beef up their collaboration tools for hybrid work environments. Many are looking to outfit all of their conference rooms with HD cameras and other on-premises equipment.

"I'm not too concerned about it, honestly," Robbins said. "I think the enterprise [business] is going to be fine ... We see a robust pipeline. Enterprises are going to upgrade their core infrastructures. We see the funnel strengthening. That's what gives me optimism moving forward."

Robbins also touched on Cisco's progress with 5G and open RAN activities.

Cisco, he said, is "deeply in the middle" of multiple open RAN projects. He mentioned Japan, an apparent reference to Cisco's involvement with Rakuten.

As for 5G, he said Cisco's seeing momentum in backhaul and packet core.

Financial snapshot

Despite Cisco's optimism, revenues were down across most of its business in fiscal Q1.

Total revenues were down 9%, to $11.9 billion. Product revenues slipped 13% but were partially offset by a 6% uptick in security. Service revenues rose 2%, while infrastructure platforms revenues were down 16% and application dropped 8%. Of note, 78% of software revenue in the quarter was sold under Cisco's subscription model.

For fiscal Q2, Cisco expects revenues to be flat to up 2%.

Wall Street shared Cisco's optimism, driving shares up 7% in after-hours trading Thursday.

In other financial-facing news, Cisco announced the hiring of Scott Herren as EVP and CFO. Herren, who comes to Cisco from Autodesk, succeeds Kelly Kramer, who is retiring. Herren starts on December 18 and will report to Robbins.

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— Jeff Baumgartner, Senior Editor, Light Reading

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