Cisco Systems FQ4 2017 Earnings Preview: Federal Spending In Focus

Cisco Systems FQ4 gains 2017 are scheduled for Wednesday after closing bell, and analysts expect a non-GAAP profit of 61 cents a share, compared with $ 12.07 billion in sales. With the latest report on the company’s results last May, the administration led by 60 cents to 62 cents per share to non-GAAP earnings from $ 11.88 billion to $ 12.13 billion in sales.

In the fourth quarter last year, Cisco Systems reported non-GAAP earnings of 63 cents per share, revenue of $ 12,640 million.

 

Benefits Cisco Systems FQ4 2017:

In a letter dated August 14 note, KeyBanc analyst Alex Kurtz, highlighted some key areas of focus for revenues from Cisco Systems FQ4 2017. Sales variation has long been an important area for the company, and are at The search for $ 3.6 billion in switching turnover. The company recently revealed new switching products for Cisco Catalyst Live that believes that will drive a 1.7% increase in revenue for 2018 Switching, although the consensus is close to 0% growth.

It will also analyze gross margins, and estimated at 63.6%, just below the consensus figure of 64%. He noted that Cisco is beginning to change its customer base to purchase software subscriptions with their hardware rather than a single license. He noted that deferred and recurring revenues also affect the company’s performance during this transition.

Vijay Bhagavath, an analyst at Deutsche Bank, said in a note earlier this month that the Cisco company’s demand for the new Catalyst 9000 Campus switch and intention-based software, the 100G Nexus Center data Switching products and next generation security seemed to be stronger than expected. In addition, it has found on their pulse channel two-digit order for Analytics, Automation, Internet objects and network management company cloud computing products.

However, he said the international plan, IT spending remained low in the United States, Germany, the Middle East and emerging markets.

Government spending on Cisco Systems revenue FQ4 2017:

It is expected that government spending on technology again one of the company’s key results will focus. By publishing guidelines for the fourth fiscal quarter, the company said about one percentage point of their turnover drops from 4% to 6% due to uncertainty over federal spending. President Trump said he would cut spending, and even now legislators have not yet finalized the federal budget. This leaves in place the uncertainty that affected Cisco’s third quarter results.

Kurtz drew attention to federal spending as a key area for the revenue of Cisco Systems FQ4 2017. He spoke with value-added resellers and suppliers who rely on federal spending and found that the budget calendar has Changed due to the transition to new presidential administration, which updated the government’s priorities.

On the other hand, Bhagavad said earlier this month that the evolution of US public sector orders and particularly federal IT spending have improved, citing its own Enterprise IT, Cloud search chain Provider and service.

Guidelines for the quarter October:

For the October quarter, the consensus is currently at $ 12.06 billion in sales and non-GAAP earnings of 60 cents per share. Kurtz noted that even though the fourth fiscal quarter has always been great to pass a federal, this factor is likely to have an impact on the October quarter’s delivery outlook.

The day before the Cisco Systems FQ4 2017 profit were scheduled for launch, the company’s shares rose to 0.57% to $ 32.02 during normal trading hours.

Cisco: Both Bull and Bear Having a Hard Time Believing the Growth Outlook

Cisco Systems presented a vision of its growth rates over the next few years, but analysts who attended the presentation are having a hard time believing Cisco’s promising, with some arguing that the company needs to make a big M & A to make those numbers.

Shares of Cisco Systems (CSCO) fell 67 cents, or 2 percent, to $ 31.41 amid the broad market crash, as analysts pondered what they heard on the annual day of analysts’ the company. ! “Customer and partner event in Las Vegas.

Analysts had focused specifically on what Cisco would say about its revenue and profit growth, as I wrote a week ago. The big advantage is that Cisco revenue growth of 1% to 3% in the next three to five years, and EPS growth of “mid-simple digits”, but both the bull and the bear are having a time Hard to believe the prospects today.

A list of all CEO presentations Chuck Robbins and Chief Financial Officer Kelly Kramer and other executives can be found on the company’s investor relations website.

The discussion focused heavily on Cisco’s efforts to move on to selling ever-increasing amounts of software and also to move more and more customers to a subscription plan from the traditional product license.

Among the details, Kramer stated in its slide deck that the company’s software revenue should reach 30% of total revenues in 2020, up from 22% this year.

Recurrent revenues will grow by 10% per year until 2020, of which 40% of growth comes from products, the rest of services. That means a 30% annual growth in the products. Cisco aims to have more than 37% of its revenue ultimately be recurring.

Kramer said about $ 2 billion of revenue has been underwritten in nature, versus perpetual license, over the course of 2015 to 2017, equivalent to about 1.5% of the company’s total revenues . The target is to have between 2% and 3% by 2020.

Among the charitable opinions among today’s analysts was that of Pierre Farragu with Bernstein, who reiterates an Outperform rating, and a price of $ 38, when writing the perspective of growth, “this is a good floor for investor expectations “.

“Our 5 year model suggests revenue growth of ~ 2% and ~ 3% gross profit growth per year,” he writes. “We have not modeled gains on that time horizon, but we feel comfortable with a window of ~ 5-10%. For people with an upbeat bias that is mid-digit only, right?”

Ferragu thinks that Cisco was being moderate in terms of its perspective in order to “under-promise and over-deliver,” as they say:

We suspect that management guided to the lower end of our range in EPS for two very good reasons. First, revenue growth will be very low, close to zero, in the short term. Setting excessive expectations today would be unwise. Second, the expansion of gross margins will be an important factor for earnings growth, and here again, setting expectations too soon would be imprudent. As existing business lines switch to a subscription model, the gross margin profit will be retroactive, materializing when the lowest gross margin hardware is out of the mix.

Others are not as confident as Ferragu.

Jason Ader, of William Blair, reiterates an Outperform note on Cisco’s stock, writes that earnings growth prospects “are roughly in line with Street’s expectations,” but adds, “Cisco may need to undertake more acquisitions Transformers to accelerate its business model change and drive the top-line growth “.

“In any case,” he writes, “the valuation remains attractive at about 10 times the P / E adjusted for the auction on our 2018 calendar estimates, which keeps us positive on the stock “.

Nomura’s Jeffrey Kvaal reiterates a neutral rating, and a $ 29 price target, which said he “was not even convinced even by his goal of lowered growth,” after attending the event.

“We are experiencing greater confidence in Cisco’s position in its security and campus switching markets. However, we have not found the Cisco service provider or discussion on the web page too compelling. ”

Like Ader, Kvaal notes that the forecast for growth of 1% to 3% is about as expected, but “we found 0% more likely”.

Kvaal explains how he found the company’s presentation disappointing in part:

Cisco expects MS winds to reduce and eventually allow growth, although management has not specified why this would be possible. In our opinion, routing is in secular decline. This is especially true in some of the major routing markets of Cisco – enterprise and mobile routing. Juniper also sees the routing of service providers as a declining market. Cisco’s Web tone was optimistic. Over the past few years, the company has customized products for web readers and has won several inserts, including two in the spine of the data center, of which Cisco is very proud. Cisco, of course, made that statement in the past and, therefore, we are not prepared to give Cisco a takeover in the web scale. Dell’Oro continues to see that Cisco is losing its share in switching the data center, for example. Cisco posted an annual decline in commercial platform revenues over the last two quarters, despite growth of more than 25% over competitors. Cisco noted that its on-site data center activity is growing more slowly due to competition on the Web.

Cisco Systems to lay off about 14,000 employees

Cisco Systems Inc. is laying off about 14,000 employees, representing nearly 20 percent of the global manufacturer of the workforce of the network equipment, the technology news site CRN, citing sources close to the business.

It is expected that the California company Cisco San Jose, to announce cuts in the coming weeks, according to the report, the transition of society from its material roots in an organization focused on software.

Besides Cisco, other technology giants have announced job cuts in the face of falling PC industry in recent years, are Microsoft Corp., HP and Intel Corp. Inc

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Microsoft Corp. launched one of the largest layoffs in history Tech in July 2014, after it said it will cut 18,000 jobs.

HP Inc. said in September 2015, which is expected to cut about 33,300 jobs over three years.

Intel said in April that it would cut up to 12,000 jobs worldwide, 11 percent of its workforce.

Cisco, which had more than 70,000 employees at April 30, declined to comment.

Cisco requires increasingly “different skill sets” for “future software-defined” what he did in the past, as it pushes to capture a greater share of the target market and aims to increase their margins, CRN report said citing a source familiar with the situation.

Cisco has invested in new products such as cloud-based software tools for data centers and data analysis to offset the impact of slower spending by enterprises and telecommunications carriers in its heart craft to network routers and switches.

The company has already offered many plans to package a Cisco employees early retirement, according to CRN.

Up from Tuesday’s close of $ 31.12 on the Nasdaq, shares of the company rose 15 percent this year, compared with an increase of 10.5 percent in the index of computer hardware and Dow Jones EE. UU. Technology.

Israel and Cisco sign strategic digital agreement

Under the agreement signed by the President of Cisco, John Chambers and Benjamin Netanyahu, East Negev will become the first digital region of Israel.

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John Chambers, president yesterday signed a Memorandum of Understanding (MoU) for strategic cooperation, which aims to speed up the digitization of Israel over the next three years. The agreement was signed in the presence of the minister of social equality Gila Gamliel and Cisco general manager Israel Oren Sagi. The cooperation will focus on the application of technology and digital tools in the cloud by the public sector, the system of education, health and development of smart cities.

In the first stage of the new partnership, Cisco said in a joint project with the Ministry of social equality and the Eshkol region of the Negev, the Negev East will become the first fully digitized region of Israel. Under the project, Cisco will create a digital center, which will provide services to improve the quality of life of the inhabitants of the region and bring new jobs to promote the initiative.

Chambers said: “All countries, cities, companies, houses and cars will become digital in the next decade. The impact on GDP growth, which includes all citizens smart and secure communities, health and innovation will be dramatic. It is a great honor to be partners in this country, its citizens and Israeli government leaders to this change. ”

Sagi said, “Cisco sees Israel as a market of great importance and one of the world leaders in innovation and entrepreneurship and are therefore one of the most important centers in the world. The Cisco intelligent project of this Negev, which will make the area of Israel first digital region expresses the best possible way, the change that was adopted for this age. ”

To date, Cisco has invested $ 7 billion in direct and indirect investments in Israel. Cisco acquired 11 Israeli companies and has invested in over 30 companies and four new funds from Israeli venture capital.

Cisco partnership opens doors for EOH Technology Services

Rob Godlonton, CEO of the division ICT EOH, deals with “all that is related, including networks and unified communications.” In conversation at EOH has Gold Partner with Cisco, he said that collaboration is the result of a key business philosophies EOH: associations for life. (The other four are “better people”, “lead and grow”, “Sustainable transformation” and “right first time”.)

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“We are never in associations for the short term. We do not sell technology, then disappear, and ultimately, we want to be number one in the field experience of our technology partners. Our partnership with Cisco is customer oriented, while public and private sectors. We have invested to become the status of Cisco Gold partners it two years ago. ”

Godlonton said the association “has opened doors for EOH,” and since then the company has landed Johannesburg City Power and many other key customers.

“Cisco has excellent technology and invests heavily in technology. Our customers have made and continue to make investments in Cisco products. This means that we can be the leader in providing solutions from end to end for our clients, means continue investing in Cisco as one of the core technologies, “says Godlonton.

In the process, EOH has become very aware of how difficult it can be to keep highly qualified staff. “One of the challenges with Cisco certification is that it gives people the opportunity to go abroad, but then we have a big focus on our job creation program, the development of skills and unite the people through the ranks.

Cisco is also involved in the program – the certification and training programs have very defined. This allows us to take people through a structured program and makes it much easier courses and training “.

Godlonton said the partnership has accelerated the EOH company by opening opportunities in the business field. “Another area we are looking at is how to run SAP solutions on a Cisco platform on the back of the partnership between Cisco and Microsoft, in blue space, bringing international to a local platform cloud , “he said.

“There are not many Cisco Gold partner in SA, so it is essential for us to do the work of the Cisco combination for us. We have over 70 people in our company Cisco. Some of our EOH cloud services are built using Cisco technology, and there is a possibility for the Cisco sales staff in partnership with EOH EOH and sell products supplied by Cisco cloud “.

Cathy Smith, MD: Southern Africa for Cisco, said: “Cisco has long understood that for the Internet of Things (IOT) is a success, innovation, technology and propose solutions to the challenges of our customers require efforts a range of players working together to achieve real change. therefore, in addition to our people, our partners have always been a strategic and competitive advantage of Cisco.

“If we use our partnership with EOH for example, leverage our strengths to deliver value-added prepositions. EOH many different IT portfolios that are not in industries such as oil and gas, mining and manufacturing. In total solutions IOT, these portfolios, as well as Cisco solutions offer effective solutions to digital customers.

“To IOT to be effective, people, systems, technology, and the players must collaborate, adapt and evolve constantly. The combination of Cisco and EOH is a good example in this regard. As a fundamental part of the ecosystem, our association finally, it allows us to win together. “

According Inks Cloud of Cisco Sales With Pivotal

The Cisco Systems logo is seen as part of a display at the Microsoft Ignite technology conference in Chicago, Illinois, May 4, 2015. REUTERS/Jim Young

The Cisco Systems logo is seen as part of a display at the Microsoft Ignite technology conference in Chicago, Illinois, May 4, 2015. REUTERS/Jim Young

Cisco Systems Inc (CSCO.ON) concluded an agreement with Pivotal Software Inc. to provide products to each other in the field of cloud, a sign of the giant network company seeks to work with others in their attempt to build its presence in one of the fastest -growing areas of computing.

The agreement, which was later announced Tuesday, means that the two companies will jointly distribute Pivotal Cloud Foundry, which helps developers build and run the software in the cloud, and Cisco Metapod, a service that helps companies make their the data centers with more cloud-friendly.

Pivot service enables enterprises to deploy a free, but difficult to use open source technologies also called Cloud Foundry, as the free operating system known as Linux usually requires the services of a consultant to Red Hat Inc. RHN.N

Pivotal Cloud Foundry competes with services like (IBM.N) and IBM bluemix (HPE.N) HP Enterprise Helion, while competing with Mirantis Metapod.

The so-called cloud has become a generic term for the rapid delivery of data over the Internet, often by sharing IT resources with other companies.

While growing the core business of switches and routers from Cisco, slowed in part because customers are turning to technology that is based more on software than hardware, businesses sought in new areas such as cloud, often through acquisitions.

It is not known if Cisco will be able to expand its new cloud-based offering at a fairly high rate to compensate for the weaknesses of their craft heart.

In 2014, Cisco has sold most of its interest in a partnership to provide the material of the cloud with EMC Corp (EMC.N) and virtualization of the majority by the company EMC VMware Inc VMN.N. EMC is the majority owner of Pivotal, which left the storage giant in 2013.

Prior to the recent turbulence in global stock markets, Pivotal was considered a strong candidate to hold an initial public offering this year.

Indian Companies USe Strong Defence Tools Against Cyber Threat: Cisco

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Indigenous organizations use cyber tools high compared with other countries, but the use of these tools can put them in danger, firm Cisco networking IT, he said in a study.

“. Indigenous organizations use stronger defenses threats organizations in other countries Sixty-two percent of indigenous organizations use the Web security, only 57% of non-indigenous organizations do,” Cisco said in its White Paper on ” Security in India: Enabling Connected a new era. ”

He said that besides the 65% of organizations in India use mobile security, compared with 49% of organizations outside India.

“The increased use of large fangs threat by indigenous organizations can point to a use of tools in place strategies to strengthen protection … However, our experts warn that the only tools can not offer complete protection,” he said the newspaper.

According to the report of the security software company Kaspersky India is increasingly on the radar of cyber criminals in countries such as China, Russia and the United States, using the attacks of advanced persistent threats (APT) to steal data consumers and businesses.

According to government data, in terms of 54.483 cyber security incidents such as phishing, spam and malicious code in November 2015 were reported.
The study also found that indigenous organizations have adopted cloud-based tools that organizations of other countries.

“For example, 60% of indigenous organizations use the cloud web security, only 34% of organizations do outside India. In addition, 51% of mobile security organizations in India are using based on the web, twice the rate of non-indigenous organizations, “the newspaper said.

Cisco Security Researchers Disable Big Distributor of ‘Ransomware’

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Cisco Systems Inc said,had managed to stop the spread of one of the most harmful systems to decode users with malicious software, such as ransomware known paying the researcher requires user data drive safety infect Cisco Talos searches Angler Exploit Kit,say the analysts, several enterprises have the most effective multiple kits to the control of personal computers detect infect up to 40 percent of those he leads last year.

They found that about half of the people connected to the fisherman computers to servers in a hosting provider in Dallas,who had been hired by criminals using stolen credit cards infected.The provider , Limestone Networks,pulled the plug on servers and data supplied helped show how anglers worked.The research efforts supported by the carrier Level 3 Communications,allowed authentication protocols to use to copy criminals to anglers interact Cisco with his prey.Knowing to enable these protocols security companies that cut infected computers.

It is very harmful to the network attacker Talos said manager Craig Williams told Reuters before the release of report.Cisco said from Limestone pulled the plug on servers,new infections had fallen dramatically fishermen.Customers Relations Manager limestone told Reuters his company had inadvertently contributed to the spread of fisherman before Cisco study.

Often sold secrets in Internet forums or in one-on-one deals,exploit kits combine many small programs that exploit bugs in web browsers and other common parts of the software.Buyers of these teams should also organize a way to achieve their goals,usually by sending fake emails, websites piracy or the distribution of malicious ads.

Once in control of a target computer won, buyers can install exploit kit, what they want, including Ransom call.These include a number of brand programs , be sold , to encrypt online user’s computer files and to require release the payment them.Talos estimated that,if the three percent of infected users paid the ransom averaging $300 offenders that limestone server was used to anglers would spread can do over $30 million per year.

Cisco Joins Flurry of US-China Tech Partnerships

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Cisco Systems said on Thursday it would be a joint venture with the form of networks and cloud computing products manufacturer Chinese Inspur server in China, where the company’s Silicon Valley political pressure and declining sales for sale faces.Cisco and Inspur said they would invest $100 million in the project, although further details were offered.

The association is one of a growing number of tie-ups between Chinese enterprises and US technology on or before Chinese President Xi Jinping,he announced the visit to the United States this week .Microsoft said Thursday that it has partnered with Baidu Inc and the investment firm of private state-owned China Tsinghua Unigroup in cloud technology,while Dell announced last week that it will invest $125 billion over five years in China.

Committed earlier this year,IBM for the development of China’s advanced chip industry with a strategy of “Made in China”,while chipmaker Intel and Qualcomm to develop chips with smaller Chinese companies.As in its relations with foreign auto industry in recent decades, the Chinese authorities have made it clear to foreign technology companies that market access depends on technology exchanges and cooperation with Chinese industry.

Like many of his colleagues,the market share of Cisco in recent quarters in China,where its products are a cybersecurity threat of state media and pro-government experts said withdrawal.US business lobbyists have said that Chinese accusations amount to protectionism,while China has faced in the experience of rivals based in Shenzhen Cisco Huawei Technologies that similar allegations of Capitol Hill,when it comes to entering the United States noted.

Cisco Sues HP Over VoIP Contract

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Cisco HP searches in a dispute over a $58 million contract to provide services to an HP customer VoIP. Contract dates back to 2012, according to this position in the recorder.Cisco is committed to providing support for HP VoIP service purchased by an unidentified customer HP. The customer cancelled his service, HP and, in turn has cancelled Cisco in 2013, according to the recorder.

HP cancellation right for loans applied to early termination pay. After the credits have been applied, given Cisco HP still owed $58 million.HP said the company is entitled to a full credit, and should have nothing to pay. Cisco says HP is seeking funds representing more than what HP has.

Cisco declares a spokesman in an email :

The August 24, 2015, Cisco filed a lawsuit in the Superior Court of Santa Clara seeking to recover amounts owed after the early termination of a service contract between the two companies HP. The service contract in question was financed by Cisco Capital and the dispute relates to the calculation of a monetary credit to be applied to the loan balance due by HP under the financing agreement. As this matter is before the courts, we will not provide any additional comments.An HP spokeswoman says the company has a policy of not commenting on pending litigation.

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