Mon, Aug. 31, 2:37 PM
- Apple (AAPL -0.3%) is partnering with Cisco (CSCO -0.3%) to improve the performance of iOS devices - in Apple/Cisco's words, create a "fast lane" for iPhones/iPads - communicating via Cisco's networking hardware, which is ubiquitous at many enterprises and institutions.
- The companies are also working on creating "a seamless experience" between iPhones and desk phones in environments featuring Cisco voice/video hardware. Cisco's WebEx Web conferencing platform, Telepresence videoconferencing hardware, and Spark Web collaboration platform will be covered by the tie-up.
- The deal comes 13 months after Apple announced a partnership with IBM, which has since led to Big Blue releasing a number of iOS apps meant for business verticals. Apple has also partnered with various indie developers to bring enterprise-focused iOS apps to market.
- Separately, 9to5 Mac reports the next Apple TV set-top (expected to be shown off at Apple's Sep. 9 event) will sell for $149-$199, support 3rd-party Bluetooth gaming controllers to go with downloadable App Store games, and come with a remote featuring motion sensors and a button that activates Siri.
- The site previously reported Apple plans to continue selling the current $69 Apple TV, and that both the new and old models will support Apple's Web TV service when it launches. BuzzFeed has also shared details about the next-gen model.
- Also: Piper's Gene Munster speculates Apple is exploring its options in the augmented reality market. He highlights Apple's purchases of motion sensor maker PrimeSense and AR software firm/patent owner Metaio, as well as the hiring of the lead audio engineer for Microsoft's HoloLens AR headset.
Mon, Aug. 17, 1:23 PM
- Morgan Stanley's James Faucette has downgraded Cisco (CSCO -0.5%) to Equal Weight four days after shares rallied (amid analyst praise) in response to an FQ4 beat.
- Faucette argues elevated VC investments in networking startups "necessitates that Cisco and other incumbents keep opex investment high," even as its core end-markets show limited growth. He also thinks the Cisco's current product refresh cycle will be relatively weak, given a shift in IT budge priorities to security and software. Cisco appears to be planning new security acquisitions.
- Also: Skepticism is aired about arguments that Cisco will see multiple expansion - "[T]he company has traded consistently at ~13x for much of the last 5 years and we believe would need to show more secular growth to get credit for expansion.” - and Faucette doubts "large needle-moving acquisitions" will be made in the near-term, as new CEO Chuck Robbins and his overhauled management team get acclimated.
- Cisco is off modestly on a day the Nasdaq is up 0.6%.
Thu, Aug. 13, 2:21 PM
- Cisco (NASDAQ:CSCO) is at its highest levels since June after beating FQ4 estimates and providing in-line FQ1 guidance in its first report with Chuck Robbins at the helm. A handful of firms have hiked their targets.
- During the earnings call (transcript), CFO Kelly Kramer stated product orders rose 4% Y/Y in FQ4, an improvement from FQ3's 2% growth. Americas orders rose 7%, while EMEA and Asia-Pac orders (hurt by forex) each fell 1%. Commercial (SMB) orders were a strong point, rising 11%, and service provider orders (aided by easier comps) grew 2%, ending an 8-quarter string of declines. Enterprise was down 1%, and public sector up 4%.
- Also mentioned: 26 of Cisco's 28 largest enterprise customers now use its Nexus 9000 data center switches (they support the ACI/APIC SDN platform), and strong growth was seen for the company's core router lines (edge routing was softer).
- Atlantic Equities' Josep Bori (Overweight rating) likes the pickup in product order growth and calls the service provider improvement "a welcome surprise" given soft U.S. capex. He's less thrilled with the modest growth (+2% and +3% Y/Y, respectively) seen in switch and router sales.
- BMO's Tim Long (Outperform): "The strong results reflect the burgeoning traction of multiple simultaneous product refreshes across the portfolio, a push to software and subscription-based offerings that was highlighted by strong deferred product revenue growth, and strength in the Americas. We are positive on the momentum of the business and the early steps taken by CEO Chuck Robbins and the rest of the new management team. We like the valuation at current levels and believe Cisco’s transition to a more predictable business model and software-based offerings can help lift the multiple as well as improve margins and profitability over the long run."
- Some concerns have been voiced about light enterprise and international orders, and those with neutral/bearish ratings are quick to note Cisco benefited from favorable comps. Needham's Alex Henderson (Hold): "The results were very US-centric ... the comps get much difficult in [FQ2 and FQ3]"
- FQ4 results, guidance/details
Thu, Aug. 13, 11:23 AM
- Brean has upgraded EZchip (NASDAQ:EZCH) to Buy a day after the company post a Q2 beat and issued in-line Q3 guidance. Chardan Capital has hiked its target by $5 to $20. Shares are now up 18% over the last two days.
- Meanwhile, Cisco (CSCO - expected to make up ~35% of EZchip 2015 revenue) reported yesterday afternoon its router sales rose 3% Y/Y in the July quarter. On the earnings call (transcript), CEO Chuck Robbins noted high-end carrier router sales were strong, and that Cisco needs to "probably improve our performance in our edge routing platforms."
- EZchip's processors go into line cards for Cisco's ASR 9000 edge router line, but Cisco plans to use proprietary ASICs in next-gen edge router line cards. During EZchip's earnings call (transcript), CEO Eli Fruchter stated ~25% of EZchip's revenue is tied to the ASR 9000, and 10% to other Cisco products. "[W]e believe prior investor expectations for 35% to 40% of our revenues to be at risk due to the decision by Cisco for next generation line cards in its ASR9K platform, may be overstated."
Wed, Aug. 12, 4:24 PM
- Cisco (NASDAQ:CSCO) has broken with past custom in its first earnings report during the Chuck Robbins era, disclosing guidance (and much else) in its earnings release rather than on its call. The company expects 2%-4% Y/Y FQ1 revenue growth and EPS of $0.55-$0.57, in-line with a consensus for 2.5% growth and EPS of $0.56.
- FQ4 gross margin was 62.1%, down from FQ3's 62.5% but up from the year-ago period's 61.8%, and above guidance of 61%-62%. Product GM was 61%, and services GM 65.9%. FQ1 GM guidance is also at 61%-62%.
- Segment performance: Product revenue +4% Y/Y to $9.9B; services +4% to $2.9B. Switching product revenue +2% to $3.72B. Routing +3% to $1.99B. Collaboration +14% to $1.09B. Data center (UCS servers) +14% to $880M (share gains). Wireless (Wi-Fi-driven) +7% to $715M. Security +4% to $464M (others are growing faster). Service provider video -7% to $994M ahead of the set-top unit's sale. Other product revenue -3% to $59M.
- Regional performance: Americas revenue +7% Y/Y to $7.8B. EMEA roughly flat at $3.1B. Asia-Pac roughly flat at $1.9B. As for peers, forex has been a major international headwind.
- Financials: $1B was spent to buy back 35M shares (boosted EPS). Operating expenses (non-GAAP) rose just 1% Y/Y to $4.2B. GAAP R&D spend totaled $1.55B, sales/marketing $2.55B, and G&A $536M. The deferred revenue balance rose 7% Y/Y to $15.2B, with product deferred revenue growing by double digits. Cisco ended FQ4 with $60.4B in cash ($53.4B offshore), and $25.3B in debt.
- Cisco has risen to $28.70 in after hours trading.
- FQ4 results, PR
Wed, Aug. 12, 4:06 PM
Tue, Aug. 11, 5:35 PM
Mon, Jul. 27, 12:04 PM
- A day after officially becoming CEO, Chuck Robbins has named Zorawar Biri Singh, once the head of HP's cloud ops and then a partner at VC firm Khosla Ventures, Cisco's (CSCO -0.1%) CTO of Platforms and Solutions. His role will be to "further [Cisco's] success at anticipating customer and industry transitions, and define the [company's] technology strategy to stay ahead of the market."
- In June, Cisco named M&A chief Hilton Romanski its chief technology and strategy officer, as part of a broader announcement regarding Robbins' leadership team. However, Romanski's bio page only refers to him as chief strategy officer. Robbins states Singh will work with Romanski and Cisco's strategy team "to align our technology strategy with our business strategy and corporate development priorities."
- Also: Kevin Bandy, once an exec at Salesforce.com and Accenture (and after than an industry consultant), has been named Cisco's chief digital officer. His (vague) job description is to "design a comprehensive vision for [Cisco], and our customers, to capture the true value of digitization by leveraging Cisco’s broad portfolio of solutions and services." Bandy will work with recently-appointed operations SVP Rebecca Jacoby.
Fri, Jul. 24, 6:04 PM
- Cisco (NASDAQ:CSCO) plans to stop selling its Invicta flash storage arrays, and instead focus on offering flash systems from partners (EMC, NetApp, etc.). Those clicking on Google links for Invicta pages on Cisco's site already get redirected to the home page for Cisco's UCS server line.
- The Invicta line was the product of Cisco's $415M 2013 purchase of flash array vendor Whiptail. At the time, Cisco argued Whiptail's hardware was a natural complement to the UCS line, and proclaimed the arrays offered unmatched scalabilitiy/performance. However, from the start, there were concerns the deal would stress Cisco's age-old storage partnerships. Moreover, Cisco was forced to halt Invicta shipments last year due to "quality issues in deployments."
- John Woodall, an exec at Cisco channel partner IAS, thinks Cisco could still use Whiptail's IP in future products. "There's nothing stopping Cisco from using the Whiptail flash technology with UCS as part of a hyper-converged infrastructure appliance."
- The news comes a day after Cisco announced it's selling its set-top unit (another business that has faced its share of challenges) for $600M to Technicolor, and two days before Chuck Robbins officially takes over as CEO. Shares rose 1.4% today (in spite of a 1.1% Nasdaq drop) with the help of Juniper's numbers.
Thu, Jul. 23, 7:33 PM
- Juniper (NYSE:JNPR) has made fresh 52-week highs after beating Q2 estimates with the help of a slight Y/Y increase in Service Provider revenue (contrasts with an 8% Q1 drop). In addition, Q3 guidance is for revenue of $1.23B (+/- $20M) and EPS of $0.50-$0.54, above a consensus of $1.16B and $0.46.
- Business line/segment performance: Routing revenue -3% to $602.4M; switching -5% to $190.2M; security -4% to $107.1M. Service provider revenue up fractionally to $835.3M; enterprise -3% to $386.9M.
- Financials: $600M was spent on buybacks, and another $500M has been added to Juniper's authorization, bringing its size back up to $675M. Thanks to job cuts, R&D, sales/marketing, and G&A spend respectively fell by $3.9M, $25.6M, and $4.3M Y/Y to $251.6M, $232.4M, and $56.3M. Juniper ended Q2 with $3.08B in cash/investments, and $1.95B in debt.
- Archrival Cisco (NASDAQ:CSCO) is following Juniper higher AH. Cisco rose 1.7% in regular trading after announcing it's selling its set-top unit (has been seeing major sales declines/share loss) to Technicolor for $600M. The company remains a major provider of infrastructure hardware and software - for example, the cloud-based Videoscape platform - to pay-TV providers.
- Juniper's Q2 results, PR
Thu, Jul. 23, 8:37 AM
- France's Technicolor (OTCQX:TCLRY) is buying the set-top box and cable modem business from Cisco Systems (NASDAQ:CSCO) for €550M (about $600M) in cash and stock, after many Cisco investors called for the company to get out of set-tops entirely despite billions invested.
- About $450M of the deal is in cash and $150M in stock. The deal is expected to close in Q4 or the first quarter of next year, after regulator OKs.
- Set-tops have been in decline, making for a drag on Cisco's video business. Google offloaded its own Motorola Home business to Arris Group for more than $2B last year.
- Premarket: CSCO +1%.
Tue, Jul. 14, 7:08 PM
- "Cisco's (NASDAQ:CSCO) analysis suggests that the average large enterprise has 54-plus security vendors, with chief information officers finding it an extremely tough and convoluted landscape to manage," reports UBS' Amitabh Passi in a Tuesday note. "We don't believe Cisco has any delusions of replacing 50-plus vendors with just itself, but the goal is to simplify the landscape."
- Passi adds new CEO Chuck Robbins wants to grow Cisco's share of enterprise security infrastructure spend to 20%-30% from a current 9%, something very tough to do via organic growth alone. He adds John Chambers (still chairman) has a "mandate" to build out Cisco's security ops.
- After meeting with Cisco security execs, BMO's Tim Long also suggests more M&A is on tap. "Cisco believes that one of the key changes that will occur in the industry over the next few years is that customers will increasingly move from point vendors that provide niche solutions to companies that can provide an architectural approach ... This should also drive increased industry consolidation."
- Passi doubts Cisco will go after a bigger fish such as Check Point or Palo Alto Networks, and instead expects targeted purchases in growth markets where the company has little or no presence, such as identity access, data loss management, and app security testing. Cisco recently spent $635M to buy DNS security tech provider OpenDNS.
- Security's share of IT spend has been steadily growing, thanks in no small part to a flurry of high-profile cyberattacks. Cisco has held its own within the segment, but various smaller firms (FireEye, Fortinet, Palo Alto, etc.) have grown much faster.
- Last month: Cisco outlines security strategy
Tue, Jul. 7, 12:32 PM
- Cisco (CSCO -0.8%) is acquiring MaintenanceNet, a provider of cloud software for managing, renewing, and selling recurring service contracts, for $139M in cash and retention incentives.
- In a blog post, Cisco exec Debbie Dunham notes her company has been offering joint solutions with MaintenanceNet since 2009 to Cisco distributors and resellers. "MaintenanceNet’s software identifies customers with service contracts that are coming up for renewal, overdue, or with products that are not yet covered. Their low-touch solution enables automated quoting, notifications, and, in some cases, ordering online. This helps Cisco partners capture high-volume and low-dollar sales opportunities that may risk being overlooked."
- The deal follows Cisco's $635M deal to buy DNS security software/services provider OpenDNS. In late 2012, the company set a goal of doubling software revenue within 5 years.
Tue, Jun. 30, 8:50 AM
- Continuing its efforts to profit from growing corporate cybersecurity spend and keep fast-growing upstarts (Palo Alto Networks, FireEye, etc.) at bay, Cisco (NASDAQ:CSCO) is acquiring OpenDNS, a provider of cloud-based cybersecurity software and services (e.g. malware/phishing-protection, Web filtering, threat intelligence) that revolve around handling and analyzing domain name requests.
- Cisco is paying $635M in cash and assumed equity awards. The deal is expected to close in FQ1 (the October quarter). The purchase is Cisco's first big acquisition since Chuck Robbins was named John Chambers' successor.
- OpenDNS' products are offered both to businesses and individuals. The company claims 65M+ users, including workers at "thousands of companies from Fortune 500’s to small businesses." It handles over 60B daily DNS queries requests (over 2% of all global requests). For now, partners include a slew of Cisco rivals, such as FireEye, Check Point, and Aruba Networks.
- Cisco: "Combining OpenDNS' broad visibility, unique predictive threat intelligence and cloud platform with Cisco's robust security and threat capabilities will increase awareness across the extended network, both on- and off-premise, reduce the time to detect and respond to threats, and mitigate risk of a security breach." The company recently outlined a security strategy focused on embedding security features throughout its hardware lineup, as well as protecting endpoints.
- The acquisition could pose a challenge to DNS and IP address management hardware/software vendor Infoblox (NYSE:BLOX), which has been growing its security exposure.
- Past Cisco security acquisitions: ThreatGRID, SourceFire
- Yesterday: Cisco unveils IoT System, launches 15 new products
Mon, Jun. 29, 12:52 PM
- Cisco's (CSCO -2.2%) IoT System fuses new and existing hardware, software, and services with the goal of providing an end-to-end networking solution for Web-connected embedded devices used in enterprise and industrial deployments - a device category expected to see major growth in the next several years. GE, Intel, Rockwell, and Toshiba are among Cisco's launch partners.
- Cisco declares its IoT system rests on 6 "pillars": IoT-focused switches, routers, and Wi-Fi hardware (some built in rugged form factors); security products to monitor, detect, and respond to attacks; network analytics software; management/automation software; APIs for developers to build apps on top of the system; and an infrastructure for providing local/distributed computing services for IoT devices (referred to as Fog Computing).
- 15 new products have been announced in tandem with the launch. They include IP surveillance cameras, security analytics software, Fog data services and management software, 7 4G/WiFi-capable industrial routers, an Ethernet switch for factories, and a Wi-Fi access point for mass transit systems.
- "IoT is complex, but many customers want an integrated system within a heterogeneous environment, says Cisco exec Kip Compton about the company's solution, which features proprietary hardware meant to work with 3rd-party devices and software. Colleague Andres Sintes: "[We're] going to help [partners] find a solution down to that specific area of that factory floor, or wherever they need to be, to address that customer need."
- Aside from direct product sales, Cisco benefits from IoT deployments to the extent they increase the amount of traffic handled by carrier and data center networks using Cisco gear. IoT services for Cisco's Intercloud platform were launched earlier this month.
Wed, Jun. 24, 11:54 AM
- Baird has downgraded Fortinet in response to a healthy 2015 run-up, and many security tech peers have joined the company in seeing profit-taking (HACK -1.3%). The Nasdaq is down just 0.1%.
- Decliners include FireEye (FEYE -2.3%), Qualys (QLYS -6.7%), KEYW (KEYW -5.1%), Check Point (CHKP -1.9%), Barracuda (CUDA -2.5%), Vasco (VDSI -2.5%), and Proofpoint (PFPT -1.8%). UBS downgraded FireEye to Neutral two days ago while citing valuation, and also cut Symantec to Sell. RBC has hiked its Qualys target by $6 to $44 today, while reiterating a Sector Perform.
- The selloff comes as an Office of Personnel Management (OPM) official states up to 18M Social Security numbers may have been stolen in a recent breach. FireEye recently ID'd a Chinese group it believes was responsible for the hack.
- Meanwhile, the WSJ has published a column about Check Point's efforts to expand beyond its core firewall market, and thereby keep the likes of Fortinet and Palo Alto Networks at bay. Gartner estimates Check Point had a 22.7% 2014 firewall share, well above #2 Cisco's (NASDAQ:CSCO) 15.9% but down from a 2013 share of 24%.
CSCO vs. ETF Alternatives
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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