- Cisco Systems (NASDAQ:CSCO) is now off 4.3% in postmarket trading, after a quarter where it beat analyst expectations but issued downbeat guidance as it modeled little near-term improvement in its service provider business.
- In product revenues, gains were led by Security (up 11%) and NGN Routing (up 6%); Switching fell 7%, Collaboration fell 3%, Data Center declined 3%, Wireless fell 2% and Service Provider Video dropped 2%. Geographically, the Americas were down 1%, EMEA flat, and APJC up 6%.
- On the company's earnings call, CEO Chuck Robbins said the guidance was conservative predominantly because of "the [service provider] weakness and the capex challenges we've seen in SP. We've done account by account by account analysis to see what's going on there." Not to mention "political and regulatory environments that are somewhat uncertain in the U.S. and around the world."
- "Post-election, I think most CEOs I talk to are pragmatic about the result, and now we are all focused on the policy issues that matter to each of our companies," Robbins said. "I think president-elect Trump appears to be very business-oriented and focused on driving the U.S. economy."
- As far as areas of investment in a new government environment: There's "a lot of room to run" in security, says CFO Kelly Kramer. "Data Centers are a focus for us, and then even in the core we're investing."
- With U.S. policy discussions incorporating the prospect of a cash repatriation holiday (a longtime Cisco wish), cash brought home would be used to address debt and then "a blend of actions," Kramer says, with the dividend, a buyback and strategic activities on the table. What about interest rates, seemingly poised to begin a long rising cycle? "Interest rates go up, they go down; we're committed to growing the dividend."
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