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February 16, 2017

Cisco suffers fifth straight quarter of sales decline

The company seeks to accelerate move away from dependence on selling routers and switches.

By CBR Staff Writer

US networking giant Cisco Systems has revealed a fifth straight quarter of decline in revenue with its fiscal second-quarter results.

Revenue fell 2% to $11.6bn for the period ended 28 January 2017, compared to $11.8bn for the same period in 2016.

The company’s net income fell to $2.3bn, or $0.47 diluted earnings per share (EPS), in the quarter, from $3.1bn, or $0.62 diluted EPS, a year earlier.

Cisco estimates GAAP EPS to be $0.44 to $0.49 which is lower than non-GAAP EPS by $0.10 to $0.13 per share in the third quarter.

Revenue in the security business rose 14% to $528m, while revenue in the switching business fell 5% to $3.31bn in the second quarter.

Collaboration and wireless product revenue grew by 4% and 3% to $1.06bn and $632m, respectively. NGN Routing, switching and data centre product revenue decreased by 10%, 5% and 4%, respectively.

Read more: Business collaboration software: Tech for the sake of tech or vital enterprise tool?

Service provider video product revenue saw a 41% decline.

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Cisco CEO Chuck Robbins said: “We are pleased with the quarter and the continued customer momentum as we help them drive security, automation and intelligence across the network and into the cloud.

“We will remain focused on accelerating innovation across our portfolio as we continue to deliver value to customers and shareholders.” Cisco financial

Last month, Cisco announced its intent to acquire AppDynamics, a privately held application intelligence software firm, for $3.7bn. The acquisition is expected to be completed in the third quarter of fiscal 2017.

The move comes after a slew of purchases by Chuck Robbins, who oversaw the acquisition of 17 other companies since he took over as boss in 2017.

In an interview with the Financial Times, Robbins said the company will consider making much larger acquisitions as it continues move away from its traditional dependence on selling switches and routers.

“We’re open to any acquisitions that fuel our strategic growth,” Robbins said.

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