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Cisco lowers expectations after January's financial turmoil

Cisco has been forced to set modest expectations for the coming three months due to the turmoil the financial markets experienced at the start of 2016.

However the company performed well during its second fiscal quarter in 2016 which ended on 23 January. Cisco saw $11.8bn in second quarter revenue which is a 2 per cent increase year on year. The company's net income - which was $2.4bn in Q2 2015 - also increased by 31 per cent to $3.1bn.

Cisco's CEO, Chuck Robbins, has seen a trend where enterprise customers have prioritised spending funds on data centre transitions and security due to the fact that they are mission-critical. They have also decided to postpone non-necessary spending when possible.

The decision of customers to put off some purchases has led to data centre products and campus-level products seeing a slowdown in sales. Cisco's wireless business has remained flat while its data centre products have gone down by three per cent year on year.

Service provider video, security and other products and services did see increased sales though. Service provider video revenue increased by 37 per cent to $569m while security revenue was also up by 11 per cent to $462m and other products were able to generate $77m for the company.

WebEx, Meraki Cloud Networking and cloud security were all able to achieve double digit revenue growth according to Cisco's CFO Kelly Kramer.

Cisco's efforts to return to China also led to a 60 per cent growth rate in that country which helped to offset its business in America which remained flat for the quarter.

The turmoil that occurred in financial markets in January has definitely altered the spending habits of enterprise customers but Cisco was still able to boost revenue regardless of the slowdown.

Image Credit: photogearch / Shutterstock

Anthony Spadafora
After living and working in South Korea for seven years, Anthony now resides in Houston, Texas where he writes about a variety of technology topics for ITProPortal.