Cisco Switching Revenues Trend Positive in 3Q17

Cisco reported third quarter revenue of $11.9 billion as switching returned to positive territory.

By Sean Michael Kerner | Posted May 18, 2017
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Cisco reported its third quarter fiscal 2017 revenue on May 17, predicting declining revenues for the fourth quarter even as some areas of the business are strong.

For the quarter, Cisco reported revenue of $11.9 billion, for a one percent year-over-year decline. Net income was $2.5 billion, a 7 percent improvement from the third quarter of fiscal 2016. Looking forward, Cisco provided guidance for fourth quarter revenue to decline between four and six percent year-over-year.

The third quarter was a particularly active one for acquisitions, with Cisco announcing three new acquisitions and closing on a fourth. During the quarter Cisco closed its $3.7 billion acquisition of AppDynamics.

On May 1, Cisco announced its intention to acquire SD-WAN vendor Viptela for $610 million. On May 4, Cisco announced the acquisition of talent and technology from Advanced Analytics and on May 11 announced the intent to acquired Articifical Intelligence vendor MindMeld Inc.

"We will continue to deploy our capital resources to give us first-mover advantage as we extend our technology portfolio," Chuck Robbins, Cisco CEO, said during his company's earnings call. "In addition to our in-organic growth, we're seeing strong organic growth of our next-generation products and solutions in both networking and security. "

The organic growth of security is being assisted by the un-ending string of major cyber attacks.

"Last week's WannaCry ransomware attack was another example of the devastating impact cybercrime can inflict on individuals, companies and countries around the world," Robbins said. "Since Friday's attack, our Talos cyber threat intelligence team has been working around-the-clock to dissect the WannaCry ransomware, understand its attack patterns and keep our customers protected."

From a business perspective, Cisco's security business revenue grew by 9 percent in the third quarter, coming in at $527 million.

Cisco's massive switching business also posted positive numbers this past quarter with $3.5 billion in revenue, for a two percent year-over-year gain. For the nine-months of Cisco's fiscal 2017 so far however, Switching revenues are down by 4 percent in contrast with the first nine months of fiscal 2016.

Part of the switching growth is coming from Cisco's Software Defined Networking (SDN) effort known as Application Centric Infrastructure or ACI.

"Our ACI portfolio grew 42 percent as customers moved to 100-gig and look to automate the network and increase network performance, visibility and security," Robbins said. "We added almost 1,200 new Nexus 9K customers in the quarter, bringing the total installed base to 12,000."

Cisco's wireless networking business is also doing well with third quarter revenue of $703 million, for a 13 percent year-over-year gain.

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

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