Cisco sees "continued stabilisation" across Europe with order strength in the UK up 7%, Germany up 5%, and northern Europe as a whole up 4%. It has just reported Q3 FY '14, where it says it “executed well as we managed through the transitions in our business and markets, resulting in our financial performance above our expectations”. Cisco sees "continued stabilisation" across Europe with order strength in the UK up 7%, Germany up 5%, and northern Europe as a whole up 4%. It has just reported Q3 FY '14, where it says it “executed well as we managed through the transitions in our business and markets, resulting in our financial performance above our expectations”. From a top and bottom line perspective, total revenue was $11.5bn, down 5%. Router revenue fell 10%, but orders were nearly flat. Switch sales fell 6%.
CEO John Chambers (pictured): “Europe is still a little bit fragile, but we did see stability across the north with some growth rates for a change and Europe in total was finally positive, not counting the emerging markets for us. Even stability in the South looks like occurring. Now I know they've still got structural issues there, and I know some of the countries are in transformation, have some tough decisions to make. But I think they are out of this downturn and slowly improving.”
Orders in our emerging markets declined 7% with the BRICs plus Mexico down 13%. "As we said for several quarters, we expect these challenges to continue. The challenges we saw included Brazil, down 27% and Russia down 28%."
John Chambers once more states Cisco is seeing price pressure in markets such as campus switching (Huawei and HP are competing aggressively here), but insists software-defined networking (SDN) isn't a factor. Switching, emerging markets, and carrier sales are expected to stay pressured near-term.
The market is changing, and Cisco is evolving to match it, it says. Robert Lloyd, President, Development and Sales: “We are seeing a number of our customers of all types begin to look at not just recurring revenue, but kind of a pay-as-you-go or pay-as-you-drink type of approach. We've closed a number of key deals and these are $100 million type of deal this quarter alone that we'll see the results on over the next three to five years, but it shows very little impact in terms of this quarter.”
Data center (UCS server) sales remain strong, growing 29% Y/Y with market share gains against Dell, HP and IBM). But service provider video sales, down -26% remain weak.
On the data centre business, UCS, Robert Lloyd feels “candidly, very comfortable with us continuing to beat our competition, IBM, HP and Dell. “Our growth of 29% against, I think, the three of them added together which might have shown negative growth in terms of Blade servers. Our real competition here is white label. We saw this coming three to four years ago. We're going to sell architectures in the white label approach as opposed to standalone products. I personally believe standalone products from any company, whether its standalone switch or a standalone server will get squeezed pretty hard. And so our competition there is architecture and how you bring compute and network and storage together, how you bring that together with application-centric infrastructure and bring it down the environment.”