Aug. 13, 2014, 4:07 PM
Aug. 12, 2014, 5:35 PM
Jul. 28, 2014, 9:22 AM
- Following a 28% rally from its December lows, Pac Crest has downgraded Cisco (NASDAQ:CSCO) to Sector Perform.
- The firm cites valuation, along with concerns Cisco's op. margin gains will moderate in 2015. Following a rough 2013, Cisco's op. margins have been improving in recent quarters thanks to cost cuts and gross margin gains.
- The downgrade comes ahead of Cisco's Aug. 13 FQ4 report. Shares currently go for 9x FY15E (ends July '15) EPS exc. net cash.
- CSCO -0.9% premarket.
Jul. 23, 2014, 1:45 PM
- Juniper's (JNPR -9.8%) soft Q3 guidance, along with its related commentary on U.S. telco demand, is taking a toll on fellow telecom equipment suppliers Cisco (CSCO -1.2%), Ciena (CIEN -3.2%), Cyan (CYNI -2.5%), Zhone (ZHNE -6.5%) Ruckus (RKUS -1.6%), and Sonus (SONS -3.8%).
- Optical component vendors JDS Uniphase (JDSU -2.9%) and Finisar (FNSR -2%) are also off, as are several chipmakers (previous) with heavy networking/telecom exposure.
- On its CC (transcript), Juniper stated "market dynamics including M&A activity" are affecting the "sequencing and timing" of U.S. carrier projects. Jefferies reported in June AT&T has significantly cut its wireline capex in the wake of the DirecTV deal.
- There has been speculation AT&T is keeping a lid on wireline capex ahead of the full rollout of its ambitious Domain 2.0 initiative, which will feature the launch of software-defined networking (SDN) and network functions virtualization (NFV) platforms.
- Juniper insists it remains well-positioned with the aforementioned U.S. carriers, and that it has "major design wins" for next-gen projects. The company adds demand remains healthy with U.S. federal, cable, and Internet clients.
- The company's router revenue rose 7% Y/Y in Q2 to $617.8M, and its switch revenue rose 25% to $199.8M. Security product revenue fell 8% to $111.6M. The Junos Pulse VPN software ops (about to be sold for $250M) contributed $31.4M in revenue ($15.9M product, $15.5M service).
Jul. 15, 2014, 10:51 AM
- As part of their longstanding alliance, Cisco (CSCO - unchanged) and Microsoft (MSFT +0.1%) have signed a new 3-year "go-to-market plan" featuring tech integration and sales/marketing partnerships for a slew of data center products.
- On Cisco's side, the products covered include its Nexus data center switches and UCS servers - two bright spots for the company. On Microsoft's site, they include Windows Server, SQL Server, System Center, and Azure.
- The deal, which comes amid Microsoft's partner conference (previous), also features a program to migrate Windows Server 2003 clients to UCS systems running Windows Server 2012 R2. Nonetheless, Microsoft and Cisco remain rivals in the unified communications software space.
- Separately, the WSJ reports Microsoft is close to buying Aorato, an Israeli developer of cybersecurity/identity-protection software, for $200M.
- Aorato's products analyze interactions with Microsoft's Active Directory (enterprise authentication/ID management) service to detect suspicious activity, and prevent unauthorized access to IT resources.
- The report follows the launch of an Azure identity/access management service in March, and comes amid a flurry of cybersecurity M&A activity.
Jun. 30, 2014, 1:24 PM
- Assemblage offers Web-based online meeting, presentation broadcasting, screen-sharing, and whiteboarding apps that integrate with a variety of 3rd-party cloud services and support 40 different file types.
- The purchase bolsters Cisco's (CSCO +0.7%) collaboration software unit, which is headlined by its WebEx (Web conferencing) and Jabber (IP-based voice, video, and messaging) tools. Terms are undisclosed.
- The business has been a pocket of strength for Cisco: Though its total collaboration revenue fell 12% Y/Y in FQ3 (orders rose 4%) due to videoconferencing hardware weakness, WebEx revenue was up 7%.
- Cisco recently struck a deal with Jive Software to integrate WebEx/Jabber with Jive's enterprise social networking software. The deal has fueled some speculation Cisco could make a bid for Jive.
Jun. 23, 2014, 6:16 AM
Jun. 18, 2014, 7:12 PM
- Facebook's has produced a new top-of-rack data center switch (called Wedge) and switch OS (called FBOSS) meant to run on a cheap micro server board that can easily be swapped out.
- GigaOm observes Facebook doesn't simply want cheaper hardware, but is also looking to "eliminate the network engineer and run its networking operations in the same easily swapped out and dynamic fashion as their servers."
- Facebook stresses Wedge/FBOSS' modularity - "You could use an ARM-based microserver rather than the Intel-based microserver we've selected. Or you could take the electronics and repackage them in a new enclosure..." - and says the design will be submitted to its Open Compute initiative, thus allowing OEMs to begin using it.
- Wedge/FBOSS are aimed squarely at Cisco (CSCO), which dominates the data center switch market (71% estimated share) with its proprietary gear. Rivals such as newly-public Arista Networks (ANET) are also in its crosshairs.
- John Chambers has already called white-label hardware - beloved not only by Facebook, but also Amazon and Google - Cisco's biggest long-term threat. Facebook's move comes shortly after JPMorgan noted sales of white-box switches rose 18.6% Y/Y in Q1, and made up 9.3% of 10-gig port shipments.
- Last year: Facebook working on new networking fabric
Jun. 17, 2014, 9:29 AM
- Cisco (CSCO) is buying Tail-f Systems, a Swedish provider of network orchestration software for carriers, for $175M in cash + retention incentives.
- Tail-f's software enables the rapid provisioning of apps/services over networks featuring hardware and virtual appliances from multiple vendors. Its offerings can be used to enable SDN implementations (likely of particular interest to Cisco), but can also work with more conventional networks.
- Light Reading notes AT&T and Deutsche Telekom are Tail-f clients - both are hatching big SDN initiatives that present challenges for Cisco - and that its revenue is believed to be below $30M. CEO Fredrik Lundberg insists Tail-f will continue its multi-vendor support post-acquisition.
- The purchase follows Cisco's 2012 acquisitions of network management/planning software firm Cariden and policy control software vendor BroadHop, and provides a fresh use for its offshore cash. Cisco has set a goal of doubling its software sales from 2012-2017.
- Carrier routing archrival Juniper bought network management software firm WANDL last year. Cyan (CYNI) is an independent player in the network orchestration space.
Jun. 11, 2014, 1:19 PM
- Cisco (CSCO +0.1%) is hatching a major reorg that could include a retirement announcement from John Chambers as soon as September, "several sources close to the company" tell veteran industry journalist Scott Raynovich.
- Chambers, 65, stated in 2012 he might retire in 2-4 years. Cisco's recent challenges, together with long-term concerns about the threats posed by white-label hardware and SDN, have heightened speculation Chambers might call it quits.
- Sales chief Rob Lloyd and COO Gary B. Moore are seen as the frontrunners to succeed Chambers, after both were given the title of president in 2012.
- The fact Cisco shares have largely been range-bound since 2004 (in spite of huge buybacks) has fueled criticism of Chambers' performance.
Jun. 6, 2014, 7:12 PM
- Responding to comments from John Chambers and other Cisco (CSCO) execs suggesting VMware (VMW) has only a handful of paying clients for its NSX software-defined networking (SDN) platform, VMware CEO Pat Gelsinger recently declared NSX's client base has hit 100.
- Gelsinger: "Some [clients] are in prototypes, some are in full deployment, but they’re paying customers." He adds two older VMware SDN clients, Rackspace and eBay, are "at dramatic production scale," and that many customers use NSX to create a secure network within a network.
- Also: Gelsinger claims Cisco's shots at VMware are good PR. "Cisco declared us public enemy No. 1, so all of a sudden every customer, every purchasing agent, has to say, ‘What’s going on over there?’"
- NSX, backed by many Cisco rivals and enabled by VMware's 2012 acquisition of early SDN leader Nicira, can be used to enable networks running on commodity gear, rather than proprietary/high-margin hardware from Cisco and others.
- Cisco is countering with its Insieme/ACI platform, which it argues delivers (thanks to hardware/software integration) better network/app visibility and simpler management. VMware and other critics assert it's much costlier.
May. 30, 2014, 6:41 PM
- IDC estimates global server sales fell 2.2% Y/Y in Q1, a slightly smaller decline than the 4.4% drop seen in Q4. Gartner, however, puts the decline at 4.1%.
- The embrace of white-label hardware by Web giants continues taking a heavy toll: IDC thinks white-label sales, which it calls ODM Direct, grew 75% Y/Y (up from Q4's 47% clip) and made up 7.3% of industry revenue, up from 6.4% in Q4 and 4.1% a year ago.
- IDC estimates market leader H-P (HPQ) saw its share hold steady at 26.5%, after having grown (at IBM's expense) 260 bps Y/Y in Q4. #2 IBM, whose hardware sales have been battered, saw its share fall 600 bps Y/Y to 19.1%.
- #3 Dell's share slipped 20 bps to 18%, while #4 Cisco (CSCO), which just reported a 29% Y/Y April quarter sales jump for its UCS server segment, saw its share rise 170 bps to 5.7%. #5 Oracle (ORCL), whose server sales are finally stabilizing thanks to engineered systems growth, rose 20 bps to 4.9%.
- Sales of x86 servers, over 90% of which contain Intel (INTC) CPUs, rose 4.9% after growing 7.8% in Q4. Non-x86 server sales tumbled 25.2%, and now make up just 17.9% of industry revenue.
- Cisco now has an estimated 24.4% of the blade server market, behind only H-P's 43.7%.
May. 27, 2014, 9:18 AM
- Talks at last week's Cisco Live conference with management and IT product buyers/distributors leaves Deutsche confident about a "stronger than anticipated [multi-quarter] ramp for Cisco's new switching, routing, security, wireless, and Cloud IT Services solutions."
- The products in question include Cisco's (CSCO) Nexus 9000/ACI switching/SDN platform, its CRS-X and NCS core routers, Meraki's Wi-Fi hardware/management software, and SourceFire's security hardware.
- Deutsche's PT has been upped to $30. A long line of firms hiked their PTs two weeks ago following Cisco's FQ3 beat and better-than-expected FQ4 guidance.
- Deutsche had downgraded Cisco to Neutral in November (following weak FQ2 guidance), when shares were at ~$21.
May. 21, 2014, 10:45 AM
- Cisco (CSCO +1.1%) is buying ThreatGRID, a developer of malware-protection and threat-intelligence software (both on-premise and cloud-based). Terms are undisclosed.
- ThreatGrid also provides an on-premise hardware appliance for makware analysis, and multiple analytics tools for studying security threats. Cisco states the company's offerings will strengthen its Advanced Malware Protection portfolio, acquired last year through the Sourcefire deal.
- SecurityCurrent's Richard Stiennon argues ThreatGrid's sandboxing technology for dealing with malware threats fills "an important gap" in Cisco's product line, given rivals such as Palo Alto Networks, Fortinet, and FireEye already have sandbox solutions.
- Cisco is counting on M&A and new services to halt recent security share losses to smaller rivals. A new managed threat defense service was launched last month.
- Yesterday: Chambers predicts "brutal" IT consolidation
May. 20, 2014, 6:56 PM
- "If you look at the top companies in the industry, most of them will not exist in a meaningful way in 10 years ... You're going to see a brutal, brutal consolidation of the IT industry where out of the top five players, only two or three of us will be meaningful in as quick as five years" states John Chambers at his Cisco Live (CSCO) conference keynote.
- Chambers notes two fellow IT giants, IBM and H-P, have seen negative revenue growth in a majority of their quarters since 2011; Cisco, of course, has had its own top-line issues as of late. He predicts smaller vendors (e.g. Juniper, F5, Riverbed) will get squeezed between Cisco (naturally) and the white-label OEMs (beloved by Web/cloud firms) he considers company's biggest threat.
- The remarks come as Cisco shows off new personal videoconferencing systems - the DX70 and DX80 - that go for $1K-$2K apiece, as well as new services and partners for its InterCloud platform, which aims to enable interconnected cloud services from dozens of service provider partners (rather than Cisco itself).
- Cisco has promised to invest $1B over the next two years in InterCloud, as it tries to make up lost time in a market featuring aggressive pricing and a long list of rivals that include Amazon, Microsoft, and IBM. New partners include NetApp and Accenture.
- The DX70/80 have won praise for their sleek, minimalist hardware (shades of Apple) and streamlined UI, but critics also scoff at their premium pricing. Videoconferencing weakness led Cisco's collaboration revenue to fall 12% Y/Y in FQ3; orders (boosted by WebEx) grew 4%.
May. 15, 2014, 1:04 PM
- No less than 16 firms have upped their Cisco (CSCO +6.4%) PTs after the company beat depressed FQ4 estimates and offered better-than-expected guidance and order data. The hikes are generally in the $1-$2 range.
- RBC (Outperform) thinks value investors might embrace Cisco as it returns to flat revenue growth and further cuts opex. "[Free cash flow] is predictable at $11B-$12B/yr; we look for Cisco to remain a dividend grower." After backing out ~$30B in net cash, Cisco currently goes for ~8x RBC's FCF target range.
- Goldman (Buy) estimates Cisco's routing and switching numbers were respectively 8% and 2% above consensus, and is pleased with early uptake for the Nexus 9000/ACI SDN platform and NCS and CRS-X core routers.
- Nonetheless, there are still plenty of concerns about long-term challenges. MKM (Neutral), which has already raised alarm bells about SDN threats: "Cisco seems to be benefiting from SDN in the near term, but the competitive landscape is set to become much more difficult over a 12+ month time frame."
- Credit Suisse (Underperform) questions "the size and scope" of early Nexus 9000 deployments. "Our secular concern is that the impact of SDN will introduce more competition at multiple points in the network. While the impact will take time, the threat will be very real, shrinking gross profit dollars for the entire networking stack."
- Shares are holding onto yesterday's AH gains in spite of a tech selloff.
- More on Cisco's earnings
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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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