Sep. 17, 2014, 8:24 AM
- Cisco (NASDAQ:CSCO) has announced its intent to acquire Metacloud, a privately held company which deploys and operates private clouds for global organizations.
- Since announcing its Intercloud strategy this past March, Cisco has been enlisting key technology partners and service and cloud providers, to accelerate the company's strategy to build the world's largest global Intercloud.
- Metacloud's OpenStack-based cloud platform already delivers and remotely operates production-ready private clouds in a customer's data center.
- The acquisition of Metacloud is expected to be completed in Q1 of FY2015.
Sep. 4, 2014, 2:33 PM
- In what the company is calling the biggest refresh for its UCS server line since its '09 introduction, Cisco (CSCO -0.4%) has added two new product lines, refreshed its existing lines, and launched new tools for handling big data/analytics deployments.
- The new UCS M-Series modular server line is getting the most attention: It supports up to 8 computing cartridges (each containing 2 Intel Xeon CPUs) in a small 2U chassis, all of which share the same storage and networking resources.
- UCS chief Todd Brannon: "To upgrade the server, just replace the cartridge ... This really kind of fundamentally breaks apart what a server is." Cisco has already worked to differentiate the UCS line through integrated networking features that improve virtualization performance. Intel, H-P, and Facebook have their own modular server efforts.
- Also launched: 1) The UCS Mini, an integrated server/storage/networking system meant for remote/branch offices and SMBs. Cisco/EMC's VCE JV offers more powerful integrated hardware. 2) UCS Director Express, software that automates Hadoop big data project deployments on UCS servers. 3) A partnership with Red Hat (RHT -0.3%) to create integrated hardware/software offerings for OpenStack cloud infrastructure deployments.
- UCS has been a bright spot for Cisco as it contends with soft carrier and emerging markets switch/router sales: IDC estimates Cisco's server revenue rose 35% Y/Y in Q2, leading its share to rise 140 bps to 5.8%. John Chambers recently mentioned UCS is now on a $3B/year run rate.
Aug. 27, 2014, 7:21 PM
- IDC estimates global server sales rose 2.5% Y/Y in Q2 to $12.6B. That marks a turnaround from the 2.2% drop seen in Q1, and the 4.4% drop seen in Q4. Gartner estimates sales grew 2.8%.
- IDC declares the server market, hurt in recent quarters by system consolidation and a shift in demand towards the white-label gear beloved by Web giants (referred to by IDC as ODM Direct), is seeing "the beginning of a cyclical refresh cycle." It sees the pending launch of Intel's (NASDAQ:INTC) Grantley Xeon CPUs, along with Microsoft's plans to end Windows Server 2003 support, lifting sales into 2015.
- Sales of x86 servers (mostly Intel-based) rose 7.8% in Q2, and now make up 78% of industry revenue. Non-x86 server sales fell 12.8%.
- Market leader H-P's (NYSE:HPQ) share rose 40 bps Y/Y to 25.4%, with x86 growth offsetting Itanium weakness. #2 IBM's share fell 340 bps to 23.6% ahead of the sale of its x86 server ops to Lenovo; on the bright side, IBM's decline narrowed from Q1's 600 bps.
- #3 Dell's share fell 160 bps to 16.2%. #4 Oracle's (NYSE:ORCL) grew 10 bps to 5.9%, with engineered system growth offsetting declines for older UNIX/SPARC server lines. #5 Cisco (NASDAQ:CSCO), which recently proclaimed its UCS server ops are on a $3B/year run rate, saw its share rise 140 bps to 5.8% on the back of 35% growth. Cisco should pass Oracle in a quarter or two.
- ODM Direct vendors saw their share grow 110 bps to 6.6%. The shares of all other vendors rose 190 bps to 16.1%.
- Related tickers: SMCI, MLNX, QLGC, ELX
Aug. 27, 2014, 11:03 AM
Aug. 14, 2014, 12:40 PM
- Six firms have hiked their Cisco (CSCO -2.8%) targets after the company beat FQ4 estimates, issued mixed FQ1 guidance, and announced plans to cut another 6K jobs. But that isn't stopping shares from selling off due to worries about weak demand from carriers (orders -11% Y/Y) and emerging markets (orders -9%).
- "Notwithstanding the fact that capex will be fairly weak in [2H14], Cisco's [carrier] order performance in the first calendar half of 2014 demonstrates meaningful share loss in addition to soft carrier spending," says MKM (Neutral).
- Nonetheless, the firm thinks Cisco's total orders will rise at or near a low double-digit % in FQ1 (favorable comps will help). "We still believe it is profitable to own Cisco when orders and revenue growth are accelerating."
- Bulls are focusing on healthy enterprise orders and strong early uptake for the Nexus 9000/ACI SDN and networking virtualization platform. John Chambers mentioned on the CC (transcript) the platform's customer count more than tripled in FQ4 to 580+, and that there are over 60 customers for the related APIC software controller (just launched).
- Several peers and suppliers with strong carrier exposure are selling off. Cisco's numbers follow a soft outlook from JDS Uniphase, and coincide with light guidance from Oclaro. ALU -1.6%. JNPR -1.8%. FN -7.4%. ZHNE -2.1%. EZCH -3.8%.
- Prior Cisco earnings coverage
Aug. 13, 2014, 5:03 PM
- Cisco (NASDAQ:CSCO) guides on its FQ4 CC for flat to 1% Y/Y FQ1 revenue growth and FQ1 EPS of $0.51-$0.53 vs. a consensus for flat growth and EPS of $0.53. Gross margin is expected to be in a range of 61%-62% vs. 61.8% in FQ4.
- Cisco plans to cut another 6K jobs (8% of the workforce), and to record a $0.14-$0.18 FQ1 GAAP EPS charge.
- John Chambers has offered cautious remarks about service provider and emerging markets demand. Carrier sales are expected to be weak for the next several quarters, and Cisco isn't expecting a major near-term recovery in emerging markets demand.
- Total product orders only rose 1% Y/Y in FQ4. Americas orders +2%, EMEA +2%, Asia-Pac -7%. Enterprise orders +9%, SMBs +8%, public sector flat, service provider -11%.
- U.S. orders +5% (strong enterprise/SMB demand) and India +18%, but China -23% and other emerging Asian markets -34%.
- Weak points: Routing revenue -7% Y/Y, switching -4%, service provider video -10%, collaboration -4%. Strong points: Data center +30% (UCS servers now on a $3B/year run rate), security +29% (boosted by SourceFire).
- CSCO -1.1% AH. FQ4 results, details
Aug. 13, 2014, 4:18 PM
- Cisco (NASDAQ:CSCO) had an FQ4 gross margin of 61.8%, -90 bps Q/Q and -30 bps Y/Y, but in-line with guidance of 61%-62%.
- Product revenue -2% Y/Y to $9.53B, a much smaller decline than FQ3's 8%. Service revenue (fueled by past product sales) rose 5% to $2.83B, better than FQ3's 3%.
- GAAP opex +4% Y/Y to $4.7B. R&D spend +5% to $1.6B, sales/marketing +5% to $2.5B, G&A -14% to $508M.
- Free cash flow was $3.3B, above net income of $2.8B. The deferred revenue balance (boosted by software/services) rose 5% Y/Y to $14.1B.
- $1.5B was spent on buybacks vs. $2B in FQ3. Cisco ended FQ4 with $52.1B in cash/investments, and $20.9B in debt.
- CC at 4:30PM, guidance will be provided.
- CSCO +0.8% AH. FQ4 results, PR.
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.
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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