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May 13, 2015, 5:33 PM
- During Cisco's (NASDAQ:CSCO) FQ3 earnings call, John Chambers said he "would not bet" on a security M&A rumor heard today.
- That was an apparent reference to FireEye (NASDAQ:FEYE), whose shares jumped on unconfirmed rumors that Cisco had made a bid.
- FireEye has fallen to $41.71 in AH trading following Chambers' remarks. Shares are still up $0.41 from Monday's close.
May 13, 2015, 5:00 PM
- Cisco (NASDAQ:CSCO) guides on its FQ3 CC (webcast) for 1%-3% Y/Y FQ4 revenue growth and EPS of $0.55-$0.57, in-line with a consensus for 1.9% growth and EPS of $0.56.
- Product orders rose only 2% Y/Y in FQ3, a slowdown from FQ2's 5%. Service provider orders (-7%, with U.S. down 17%) remain a weak spot, as do emerging markets (flat, with BRIC markets declining). Enterprise and public sector orders (up 7% apiece, with U.S. orders respectively rising 21% and 24%) were healthier, as were SMB orders (+6%). Americas and EMEA orders were both up 2%, and Asia-Pac 1% (8% exc. China).
- Product line performance: Switching revenue +6% Y/Y in FQ3 to $3.56B. Routing +4% to $2B. Collaboration +7% to $973M. Service provider video -5% to $914M. Data center (UCS servers) +21% to $801M. Wireless +9% to $611M. Security +14% to $412M.
- Some strong points: 1) Meraki Wi-Fi hardware/software sales rose 92% Y/Y. 2) Orders for Cisco's APIC SDN controllers rose 27% Q/Q, and APIC customer count to 580 from 300+. 3) Security order growth (benefiting from broader cybersecurity demand) topped revenue growth. 4) In spite of soft carrier capex, high-end routing rose 5%, driven by CRS-X and NCS core router demand.
- CSCO now -1% AH to $29.06.
- FQ3 results, details
May 13, 2015, 4:26 PM
- Cisco's (NASDAQ:CSCO) product sales continued rebounding in FQ3 following a late-2013/early-2014 slump: They rose 6% Y/Y to $9.33B. Services revenue (relatively stable) rose 3% to $2.81B.
- Financials: Gross margin came in at 62.5%, topping guidance of 61%-62% and boosting EPS. GM was up 80 bps Q/Q and down 20 bps Y/Y. Thanks in part to job cuts, GAAP operating expenses rose a modest 3% Y/Y to $4.6B - $2.4B was spent on sales/marketing, $1.5B on R&D, and $510M on G&A. The deferred revenue balance rose 8% Y/Y to $14.2B.
- $1B was spent on buybacks, down slightly from FQ2's $1.2B. $5.3B is currently left on Cisco's buyback authorization. Cisco ended FQ3 with $54.4B in cash (much of it offshore), and $21B in debt.
- CSCO -0.2% AH - many expected solid numbers. CC at 4:30PM ET (webcast), guidance will be provided.
- FQ3 results, PR
May 13, 2015, 4:06 PM
- Cisco (NASDAQ:CSCO): FQ3 EPS of $0.54 beats by $0.01.
- Revenue of $12.1B (+4.9% Y/Y) beats by $30M.
- Shares -0.14%.
May 13, 2015, 9:26 AM
- EZchip (NASDAQ:EZCH) uses its Q1 report to state its largest customer (i.e. Cisco) doesn't currently plan to use EZchip's NPS-400 network processor (NPU) in its next-gen edge router line cards.
- The company adds Cisco (NASDAQ:CSCO) recently began using EZchip's NP-5 NPU (entered production in late 2014), that it doesn't think "a next generation successor for the NP-5 is likely to ship for approximately three years," and that the NP-5 is expected to "continue generating revenues at this customer for several more years beyond this three year period."
- Concerns that Cisco could drop EZchip in favor of an in-house NPU have been around since the networking giant unveiled its nPower X1 NPU in Sep. 2013. At the time, EZchip said it believes Cisco hasn't made a decision on which processor will succeed the NP-5.
- Today, EZchip says it believes Cisco's next-gen edge router line cards will require more throughput than is provided by the NPS-400 (480 Gbps), and that Cisco is "currently developing such a solution in-house." EZchip, for its part, is working on an NPS-400 successor (the 1Tbps NPS-1000) that it hopes to sell Cisco on. The NPS-400 begins sampling in 2H15, and is being considered for other platforms at Cisco (as well as other clients).
- EZchip has tumbled to $14.28 in premarket trading.
- Q1 results, PR
May 12, 2015, 5:35 PM
May 11, 2015, 10:19 AM
- Pac Crest's Brent Bracelin has upgraded Cisco (CSCO +1.5%) to Outperform ahead of Wednesday's FQ3 report, and set a $36 target.
- Bracelin: "[T]he April quarter should mark the beginning of a multiquarter recovery for Cisco driven by several company-specific product cycle tailwinds across switching, routing, servers and wireless ... Possibility of a strong 2H rebound in service provider spending also gives us an upward bias entering F2016," Goldman argued in April 802.11ac Wave 2 Wi-Fi deployments will lift both Wi-Fi access point and campus Ethernet switch demand.
- Bracelin also consider SDN an opportunity for Cisco rather than a threat (others disagree), believes Cisco's InterCloud platform is growing rapidly (via service provider partners), and notes shares still only trade at 13x forward EPS (below the S&P 500's 17.6x).
- Oppenheimer reported positive Cisco checks last week. Bracelin's upgrade comes a week after Cisco named sales/partner chief Chuck Robbins its next CEO, surprising many who thought president Rob Lloyd would get the job.
May 5, 2015, 3:33 AM
- Cisco Systems (NASDAQ:CSCO) is set to launch a converged cable access platform, enabling cable operators to offer download speeds of one gigabit a second or more.
- The new cBR-8 system, to be unveiled on Tuesday, will "enable cable operators to achieve savings that could exceed 40% of capital and operating expenses over five years," the networking-equipment maker said in a statement.
- Yesterday, Cisco named company veteran Chuck Robbins as its new CEO. Robbins will replace John Chambers on July 26.
May 4, 2015, 8:45 AM
- Cisco Systems (NASDAQ:CSCO) has named Chuck Robbins its CEO.
- The move is effective July 26, at which time current CEO John Chambers takes on the role of executive chairman. Robbins was also elected to the board on May 1.
- Robbins joined Cisco in 1997. Chambers joined the company in 1991 and has been its CEO since 1995.
Apr. 24, 2015, 10:15 AM
- "We expect the stock to outperform on both upside to estimates and multiple expansion," writes Goldman's Simona Jankowski, putting Cisco (CSCO +0.4%) back on her firm's Conviction Buy list 17 months after pulling it. Her target remains at $34.
- Jankowski, who has long kept a Buy rating on Cisco, sees the adoption of Wave 2 802.11ac Wi-Fi systems not only boosting Wi-Fi hardware demand, but also (given Wave 2's bandwidth needs) driving sales of Cisco's 2.5G/5G campus Ethernet switches, and that the upgrades will amount to "a once-in-a-decade refresh").
- She also notes shares trade at a 30% discount to the S&P 500, and thinks that gap could narrow as more attention is given to Cisco's InterCloud platform (aims to provide a global network of public cloud infrastructures using Cisco products, via service provider partners) and IoT efforts.
Apr. 7, 2015, 2:41 PM
- Hoping to counter next-gen firewall leader Palo Alto Networks (PANW +2.7%), threat-prevention hardware/software leader FireEye (FEYE +4.5%), other smaller/share-gaining enterprise security firms, Cisco (CSCO +1.2%) has refreshed its ASA firewall line and rolled out new malware-protection and incident-response services.
- New ASA next-gen firewalls (feature technology obtained through the SourceFire acquisition) are declared to provide mid-sized firms and branch offices "with the same advanced malware protection and threat detection capabilities" enjoyed by enterprises. They combine standard firewall support with app visibility/control, malware protection, and intrusion prevention features; managed security services are provided for extra.
- AMP Threat Grid, a malware-protection solution made possible by the ThreatGRID acquisition, combines malware analysis with threat intelligence (based on behavioral indicators and a knowledge base); it's available either as a cloud service or through an on-premise appliance based on Cisco's UCS servers. Meanwhile, new incident-response services help companies probe and respond to cyberattacks. Cisco has already been rapidly adding to its security service portfolio.
- Cisco's security product revenue rose 6% Y/Y in the January quarter to $416M; Palo Alto and FireEye respectively saw 54% and 150% sales growth in their most recent quarters (the latter was boosted by M&A). Palo Alto recently launched a threat intelligence service (AutoFocus) to complement its popular WildFire threat-detection service. FireEye offers a slew of threat-prevention/intelligence services, and has been hired to probe several high-profile cyberattacks.
- Shares of all three companies are higher on an up day for equities.
Apr. 1, 2015, 12:27 PM
- Cisco (CSCO -1%) is buying Embrane, a provider of virtual (software-based) firewall and load balancer appliances, and (perhaps more importantly for Cisco) a software platform for deploying and managing virtual appliances (whether Embrane's or a third party's). Terms are undisclosed.
- Embrane's team is joining Cisco's Insieme SDN/switching unit; the networking giant argues Embrane's offerings will strengthen the feature set of its Nexus data center switch line and ACI SDN/networking virtualization platform (seeing healthy growth, in pitched battle with VMware's NSX).
- SDXCentral observes Embrane could help Cisco support higher-level (Layer 4-7) network traffic management via ACI. Along the way, Embrane's IP could help Cisco better address a virtual networking/security appliance market that (by enabling commodity servers to be quickly turned into switches, firewalls, etc.) has been easily outgrowing the market for physical appliances.
Mar. 26, 2015, 2:05 PM
- MKM's Michael Genovese is pleased with Infinera's (NASDAQ:INFN) recent unveiling of two new photonic integrated circuits (PICs) that will go into optical transport systems aimed at 100G metro networks. "PICs are the source of the company's competitive advantage in long haul, and we expect the new more flexible and granular PICs to form the basis of a compelling Metro 100G aggregation/Telecom product later this year."
- Infinera asserts its new PICs offer more flexibility by allowing capacity to be "divided at a granular optical level with each slice capable of being routed in a different direction as it exits the line card or the system housing it." One PIC (the ePIC-500) delivers 500Gbps of capacity at network hub locations, and the other (the oPIC-100) 100Gbps at network spoke locations.
- Infinera claims tests showed "an estimated average reduction of 28 percent in modules, 31 percent in power and 45 percent in bandwidth inefficiencies as compared to conventional, commercial off the shelf technologies that deliver single-wavelength or super-channel solutions for 100G, 200G or 400G."
- Genovese sees Infinera's addressable market expanding to ~$20B in 2018 from ~$5B in 2014 as it "competes in end-to-end Optical Transport including Metro and [data center infrastructure]," and as its systems handle traffic forwarding features traditionally handled by routers - the latter could pose challenges for Cisco (NASDAQ:CSCO) and Juniper (NYSE:JNPR).
- Infinera is once more within a dollar of a 52-week high of $19.48.
Mar. 24, 2015, 11:29 AM
- Like others, Stifel reports Ciena (NYSE:CIEN) and Cisco (NASDAQ:CSCO) are expected to share a huge Verizon 100G metro optical contract. However, while others have reported Cisco will get ~2/3 of the contract, Stifel's checks indicate the Cisco/Ciena split hasn't been determined; the firm believes "both vendors will start on an equal footing," and that Ciena might even get a majority of the deal.
- Ciena is expected to supply a platform that's similar to its 6500 series packet-optical (integrated Ethernet switching/optical networking) hardware, and which supports OTN switching. Stifel thinks Ciena, whose 6500 series is already used in Verizon's 100G long-haul network, could get over $100M in 2016 revenue from the metro deal. Cowen has estimated the total contract opportunity could be worth $200M-$300M over two years.
- Optical component vendor NeoPhotonics (NPTN +4%), which received 15% of its 2014 revenue from Ciena (trailing only Huawei's 38%) and has healthy 100G exposure, is also rallying. Its shares are now up 104% since a Q4 beat was posted on March 3.
- Update: Verizon has confirmed Ciena and Cisco have won the deal. No word on the split between the companies.
Mar. 18, 2015, 12:31 PM
- Polycom (PLCM +1.7%) plans to offer a line of videoconferencing products built specifically for Microsoft's (NASDAQ:MSFT) widely-used Skype for Business (until recently known as Lync) unified communications (UC) software platform.
- The first product created for the offering, the RoundTable 100, is aimed at SMBs; Polycom claims it takes "just minutes to set up and start using. In addition, Polycom's CX videoconferencing hardware line will join the RoundTable line, and its VVX business phones will support an upcoming Office 365 cloud VoIP service.
- Synergy Research just estimated Microsoft had a 13% Q4 UC collaboration market share, second only to (Polycom archrival) Cisco's (NASDAQ:CSCO) 16%. Polycom was assigned a 3% share (#5 overall). Overall, the market grew only 2% Y/Y, with declining enterprise voice and telepresence product sales offset by growing demand for hosted voice, hosted contact center, cloud UC, enterprise social networking, and enterprise presence/IM offerings.
Mar. 7, 2015, 3:26 PM
- With Intel's (NASDAQ:INTC) Grantley Xeon CPU launch and Web data center investments offsetting weak high-end server demand, IDC estimates global server revenue rose 1.9% Y/Y in Q4 to $14.5B, and Gartner estimates it rose 2.2% to $14B; those figures compares with Q3 growth estimates of 4.8% and 1.7%, respectively.
- Likewise, IDC estimates global enterprise storage revenue rose 7.2% Y/Y in Q4, aided by Web investments and healthy demand for mid-range systems featuring integrated flash. Q3 growth was pegged at 5.1%.
- IBM had a rough time its both the server and storage markets: IDC believes its storage share fell to 9% (tied for #3) from 12.7% a year earlier, and Gartner estimates its server revenue fell 14% if one excludes Big Blue's x86 server unit, which was just sold to Lenovo. After accounting for the x86 sale, IDC estimates IBM's server share was at 13.7% (#3) vs. 26.8% a year ago.
- HP (NYSE:HPQ) fared a little better: IDC has its server share falling fractionally to 26.8% (still #1 overall), and its storage share falling to 13.8% (#2) from 14.1%. The company's x86 server unit has been gaining ground against IBM's former business, but its high-end server sales remain weak.
- Cisco's (NASDAQ:CSCO) UCS server line (recently refreshed) continues to gain ground: Its share rose to 5.3% (#5) from 4.5%, with full-year revenue pegged at $2.9B. With the help of aggressive pricing and x86 growth, Dell's server share rose to 16.7% (#2) from 15.2%, while its storage share slipped to 9% (tied for #3) from 9.2%. Lenovo (OTCPK:LNVGY) claimed a 7.6% server share (#4) thanks to the IBM deal, kicking Oracle (NYSE:ORCL) out of the top-5 along the way.
- EMC, whose high-end storage sales have been pressured (mid-range/flash demand has been better), saw its storage share drop to 22.2% (still #1) from 23.1%. NetApp (NASDAQ:NTAP), which posted an FQ3 miss and light guidance last month amid tough mid-range competition from EMC and others, saw its share drop to 7.2% (#5) from 8%.
- Not surprisingly, the white-label hardware beloved by Google, Facebook, Amazon, etc. continued to take share. IDC estimates such hardware, referred to as ODM Direct, claimed server and storage shares of 8.2% and 12.8% vs. 6.4% and 9.9% a year ago.
- Sales of x86 servers, the lion's share of which run on Intel CPUs, rose 7.1% to $11.5B. Sales of non-x86 servers fell 14% to $3B, thanks to declining demand for both mainframes and UNIX servers running proprietary RISC CPUs. "Early-stage revenue" was seen for ARM (NASDAQ:ARMH) servers, largely via HP's Moonshot line.
- Other companies with strong server and/or storage exposure: STX, WDC, SMCI, MLNX, AVGO, QLGC, RHT
Cisco Systems Inc is engaged in designing, manufacturing and selling of Internet Protocol (IP) based networking products and services related to the communications and information technology (IT) industry.
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