The network giant Cisco Systems Inc. is looking for slight revenue growth in the next quarter, which is the first advance since November 2019, but some of its core equipment businesses are still suffering from the pandemic.
On Tuesday, the Cisco CSCO,
reported slightly better-than-expected fiscal earnings in the second quarter, as it sees ‘gradual improvement’ in the growth of orders in its commercial, public sector and service providers, which account for almost three-quarters of its product orders. But it is also said that the business enterprise remained soft due to long sales cycles and the disruption of spending by companies during the pandemic.
Among the areas most affected by the pandemic, total product revenue was $ 8.6 billion, down 1%, and network infrastructure platforms up 3%.
The WebEx video conferencing business has once again shown double-digit growth as companies continue to use it for group video meetings while employees work from home.
While remote work is a boon for Cisco’s video conferencing software, it’s causing delays in some corporate upgrade projects on corporate campuses. Cisco CEO Chuck Robbins said employees who eventually return to the office will help their infrastructure sales, such as switching and routing products, and its software-based networking service called CAT 9000.
‘I really believe it’s going to be hybrid, where people are going to work from home and everyone is going to land here, where they are going to work from home three days a week and work from the office two days a week and vice versa, Said Robbins. ‘The question is what kind of accommodation it leads to customers, based on employees’ concerns about space issues, concerns about future pandemics or other problems. This is what we just do not know yet. ”
He added that some customers are now also starting to upgrade to the next generation WiFi, called WiFi 6.
The future of a hybrid workplace is also likely to fuel demand for WiFi 6, Robbins said. Many workers will still hold video conferences in office meetings, making even greater demands on corporate networks.
Cisco said it expects revenue to reach 3.5% to 5.5% year-on-year in the third quarter of the year. The company’s leadership includes the fact that the third quarter will last an extra week, noted the new CFO of Cisco, Scott Herren, who took over the position from Kelly Kramer.
Investors were clearly hoping for Cisco as they lowered its shares as the call progressed, and the shares declined after 5 hours. It seems that major network expansions or upgrades are likely to proceed slowly, on a needs basis, as long as most U.S. businesses are still working from home.