Cisco Systems, Inc. (NASDAQ:CSCO) reported a good first quarter, outperforming the Wall Street forecasts. This implies that the San Jose California-based company is going well in adapting to new technologies and continues to outpace its rivals.
Overall, the profit grew 12 percent to $2.4 billion. The company posted operating earnings of 54 cents a share just above average analysts’ estimates of 53 cents a share. Cisco System’s revenue climbed up 5 percent to $12.1 billion, up from the average analyst estimate of $12.07 billion.
John T. Chambers, Cisco’s chief executive, said the better performance by company showed that the company was “pulling away from our competition.”
The essence of Cisco’s strategy, Mr. Chambers said in a conference call, was to steadily make the transition from “selling boxes” to selling efficient “outcomes” for customers with Internet technology.
Few businesses didn’t performed well including the revenue generated from the sales of equipment to telecommunications and cable companies which fell by 7 percent and demands in emerging markets also slumped, especially in Russia and China.
Mr. Chambers said the business in China could be “turned around, assuming our governments get along.”
Yet the declines in sales in some parts were more than counterbalance by gains across enlargement of business. Cisco forecasts the increase in revenue from 1 to 3 percent in the current quarter.
Chief Executive of company, Mr. Chambers, declared last week he would leave the post soon, which he has been holding since 1995. Charles H. Robbins will take the charge of CEO on July 26 replacing Mr. Chambers. Mr. Robbins is currently the senior vice president for worldwide field operations. Mr. Chambers will continue to serve the company as executive chairman after stepping down from CEO post.
Compared to its rivals who invaded overseas markets especially China to better fight against rivals, Cisco has outperformed its rivals in China and stay on top. “Its scale and breadth are extremely hard to replicate,” said Amitabh Passi, an analyst at UBS.
That heft amounts to what Pierre Ferragu, an analyst for the research firm Sanford C. Bernstein, called “a powerful platform advantage” in a report last week.
To stabilize its position in a constantly growing market and fight new competitors, Cisco has launched a so-called software-defined network technology, known as Application Centric Infrastructure. The technology helps in automation of the management of networks, storage and security services.
While staying on as chairman, Mr. Chambers said he planned to step back. “Chuck,” he said, referring to Mr. Robbins, “will be the C.E.O., he’ll make the decisions.” Mr. Chambers said he was looking forward to “the next stage of my career, being more of a coach.”
