Cisco Systems: Time for a Turnaround?

Cisco Systems (CSCO) announced second quarter ended January 23, 2016 total revenue of $11.8 billion after excluding SP Video CPE Business contribution for every period, up 2 percent year-over-year from $11.6 billion during the same period last year. Going forward, revenue guidance for third quarter of 2016 is projected to grow in the range of 1% to 4% year-over-year.

Steady growth

Cisco declared second quarter of 2016 non-GAAP net income of $2.9 billion or $0.57 per share, up 7 percent year-over-year from $2.7 billion or $0.53 per share in second quarter of 2015.
The non-GAAP earnings per share for third quarter of 2016 are estimated in the range of $0.54 to $0.56.

The key networking company reported continued year-over-year growth in both its top and bottom lines primarily due to focused and robust near-term execution coupled with strategic investments into delivering innovation to guide its customers towards solid prospective growth.

What’s driving growth?    

Cisco’s top line growth is primarily contributed by revenue contributions from Switching, NGN routing, collaboration and service segments which is expected to continue to grow significantly, going forward as cloud computing is being accepted by the companies at an accelerated pace and thus, requiring seamless networking capabilities.

Cisco delivered robust second quarter results despite a challenging macroeconomic environment with solid margins and over 36% year-over-year expanding cash flow from operations. The company is strategically implementing notable portfolio transformation and superior innovation in four major verticals including, developing advanced networking, starting with core data center linked to the ACI platform, targeting to grow its security business impressively, shifting towards implementing its key portfolio both for cloud-based SaaS and on-premise models and uniquely leveraging its merging and acquisition capabilities to enhance the company’s internal innovation processes in major growth verticals.

The strategically developed portfolio of key products and services by Cisco amid tough global macroeconomic environment has particularly attracted several key clients towards adopting the company’s innovative set of technology solutions and therefore, allowing it to sustain a highly-diversified and significant top line growth.

Importantly, Cisco has announced second quarter dividend of 26 cents per common share which is $0.05 or nearly 24 percent growth over last quarter’s dividend. In addition, the company recently declared a $15 billion expansion in its latest share repurchase schedule and thus, making the total outstanding authorization under current repurchase schedule to nearly $16.9 billion which is in line with the company’s continued commitment towards returning a majority of the invested capital to its key stakeholders.

The global networking company lately introduced the first completely integrated, threat-centered Cisco Firepower™ Next-Generation Firewall (NGFW) which focuses on threat defense for application control systems instead of the legacy NGFWs and enabling organizations to successfully defend against the latest threats. In addition, Cisco is soon launching the advanced Cisco Security Segmentation Service which is an advisory service enabling companies develop sophisticated security controls and allowing to improve upon compliance, data loss avoidance, advanced content security, threat recognition and breach control all through their IT installations.
Published on Feb 17, 2016
By Yaggyaseni Mittra

Copyrighted 2020. Content published with author's permission.

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