“It was a great quarter, flat out,” said Charles Giancarlo, the company’s chief development officer (who is seen by many inside and outside Cisco as the eventual successor to CEO John Chambers) in an interview with Barron’s Wednesday afternoon. “We were above expectations, at the high end of the range. We had strength across our product lines, in all customer segments.”
Giancarlo says there were good results in both primary core market segments: carriers and enterprise. The carrier business was driven by the build-out of new fiber networks, plus replacement of legacy networks, he said. On the enterprise side, he says that the “big trough in capital spending is gone,” and people are upgrading networks. Giancarlo says he thinks the company is “definitely taking share - significant share” in the carrier segment.
He also noted that the company saw 21% year-over-year growth in its newly acquired Scientific Atlanta business; he says the business had been growing 10%-12% a year when it was acquired.
Asked about the company’s acquisition strategy, Giancarlo says Cisco “is not afraid of large acquisitions;” he says the company prefers to buy small companies, but that in some cases - like SA - buying larger companies is the only way to gain exposure to a particular market.
Giancarlo described the tone of analysts on the company’s post-report conference call as “giddy,” and the stock trading reflects those sentiments: in after hours trading, Cisclo shares were up $1.89 at $26.99; that’s a new 52-week high, and except for a brief spurt in 2004, the highest level for the stock since 2000.