Cisco Revenues Rise as Headcount Falls

Networking giant grows its wired and wireless networking business as it rebalances workforce for greater efficiency

By Sean Michael Kerner | Posted Aug 15, 2013
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Cisco reported its fourth quarter fiscal 2013 financial results late Wednesday, showing positive growth and momentum across key networking segments. Despite the growth, Cisco plans to reduce its workforce by 4,000 employees in a bid to further improve operational efficiency.

For the quarter, the vendor reported $12.4 billion in revenue, a 6 percent year-over-year gain. Net income grew by 18.4 percent to $2.3 billion. For the full year, Cisco reported its income at $48.6 billion for a 5.5 percent year-over-year gain, while net income came in at $10 billion for a 24.2 percent gain.

Moving forward, Cisco provided first quarter fiscal 2014 guidance for revenue growth to range from 3 percent to 5 percent on a year-over-year basis.

Despite the growth, Cisco still sees a need to cut its costs by way of an employee reduction that will impact approximately 4,000 employees, 5 percent of Cisco's global workforce

"The most difficult decisions we make as leaders are those that impact our employees," Cisco CEO John Chambers said during his company's earnings call. "However, we will always take the necessary actions to efficiently manage our business for the long run."

Switching

From a product portfolio perspective, Chambers emphasized that Cisco's network switching portfolio is doing very well.

"Our Nexus switching product line continues with its strong double-digit growth over 20 percent," Chambers said. "In the campus, our fully converged wired and wireless Catalyst 3850 platform continues its very strong performance, with the current quarter order rate of over a 150 million after only two quarters in the market."

Cisco first announced the Catalyst 3850 in January of this year. The Catalyst 3850 is built with the Cisco Unified Access Data Plane (UADP) technology, which enables both wired and wireless traffic management on the same piece of silicon. Cisco invested over $100 million in research and development to bring the UADP to market.

Cisco wireless business is also growing, thanks in part to its new Meraki Cloud division. Cisco acquired Meraki in November of 2012 for $1.2 billion.

"We were particularly pleased with the performance of our cloud networking business based upon our acquisition of Meraki, which this quarter grew orders over 100 percent from the prior quarter with an order run-rate now of over $250 million," Chambers said.

Open Source and SDN

Chambers also used his company's earnings call as an opportunity to highlight Cisco's open source and Software Defined Networking (SDN) credentials.

"Cisco ONE continues to gain strong customer momentum by delivering, in our view, the most comprehensive framework for network programmability and SDN," Chambers said. "We have more than doubled the number of beta customers to over 120 who are utilizing Cisco ONE to program, orchestrate, and manage their networks."

The Cisco ONE (Open Network Environment) effort was first announced in June of 2012 as a way for Cisco to jump into the SDN market.

"We also are continuing to invest in open source communities like OpenDaylight and OpenStack as a means to help accelerate our customers’ adoption to SDN and cloud," Chambers said. "Technology from Sourcefire, our most recently announced acquisition, is based on industry-leading open source platform for security."

Cisco announced its intention to acquire Sourcefire for $2.3 Billion at the end of July.

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist

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