Economic Jitters Hampers Network Spending By Cisco

Networking components and Memory Vendor Cisco expects the network spending to continue being hampered by the economic uncertainty as evidenced by the downward trend in revenue over the past year. That won’t change anytime soon according to Cisco Systems which issued a statement on Wednesday revealing they are bracing for the overall impact and remain extremely cautious about replacing LANs that still work. Even though the dominant networking vendor reported higher sales numbers for the past three months ending in April 30^th, Cisco cited stock-market fluctuations back in January.

Stocks for the company have since rebounded but the orders for campus network gear haven’t done as well. Overall the revenue was down about three percent this past quarter according to CEO Chuck Robbins. What’s worse is Cisco doesn’t expect any improvement in the current quarter which ends in July. Citing the political upheaval in Brazil as well as the upcoming vote on Britain leaving the European Union which Cisco vehemently opposes as key reasons why the company aren’t expecting revenue to rebound. But the downward economic trend helps Cisco in other ways such as suppressing startup valuations enabling Cisco to snatch up companies like Acano, Jasper Technologies and CliQr at a much faster pace than usual.

Cisco is always on the lookout for companies that fit and although buyouts will slow down in the coming months that should allow ample time for Cisco to end their quarter on a good note. Webscale customers represent a huge portion of Cisco’s business and huge companies like Google and Facebook will need to keep expanding their huge data centers and adopt to automation in order to cut costs. With a clear path to deploying a model that both diversifies and amplifies their portfolio Cisco will rebound in a resounding manner. Cisco’s model for future networks can be seen in its Meraki division. The Meraki division sells network gear with cloud-based management and policy and their success has resulted in sales growing in double digits. Cisco reported $12 billion in revenue this past quarter which is up by 3% from last year with a reported profit of 2.3 billion.

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