500-490 study help - Designing Cisco Enterprise Networks Updated: 2023

Shares of Cisco Systems Inc. fell more than 11% in extended trading today as the company warned it will likely miss analysts’ expectations in its fiscal second quarter by a wide margin.

The company expects this to have a knock-on effect, and its forecast for the current fiscal year also came in low.

The disappointing guidance came in the wake of a solid earnings beat. The company reported first quarter earnings before certain costs such as stock compensation of $1.11 per share, with revenue up 8% from a year earlier to $14.67 billion. The results were better-than-expected, with analysts looking for earnings of just $1.03 per share on sales of $14.61 billion.

All told, Cisco reported a net income of $3.64 billion for the quarter, up from $2.67 billion a year earlier.

Cisco said its problem is that it has experienced a notable slowdown in new product orders during the quarter. This is because many of its clients are currently busy installing and implementing products that were delivered recently, over the prior three quarters, Cisco Chief Executive Chuck Robbins (pictured) said in a conference call with analysts.

During the COVID-19 pandemic, the company had been stuck with a backlog of unfulfilled orders caused by component shortages. But its supply chain constraints eased rapidly about a year ago as China exited its lockdown strategy, leading to a glut of product deliveries over the last four quarters. Now, customers have their hands full implementing all of those products.

“Our customers and our sales organizations have been very clear with us over the last 90 days that this is the issue,” Robbins said, though he also admitted that sales cycles are still longer than is usually the case.

According to Robbins, “customers are now taking time to onboard and deploy these heightened product deliveries,” hence the slowdown in new orders. He said it’s mainly larger enterprises, service providers and cloud customers that are facing these challenges, adding that the issue was “most pronounced in October.” On average, Cisco’s biggest customers are waiting to implement one to two quarters’ worth of shipped products, he added.

Cisco had a good quarter, but is now suffering from its post pandemic high, when it was finally able to deliver pandemic orders it could not fulfill due to supply chain challenges. Now that it has fulfilled those orders, the demand has weakened as enterprises are implementing and the channel reducing inventories. The good news is all product lines are growing, which has not been too often the case, and Cisco delivered approximately 1B more in profit on roughly 1B more in revenue, which means Chuck Robbins and team have kept costs constant and EPS per share are up a quarter. Let’s see if this trends continues.

Because of these customer issues, Cisco could only offer a much lower forecast than Wall Street analysts had been anticipating. Officials said they’re looking for earnings of between 82 and 84 cents in the second quarter, with revenue of $12.6 billion to $12.8 billion, implying a 7% decline from one year earlier. That compares very badly with the Street’s forecast of 99 cents pre share in earnings and $14.19 billion in sales.

For the full year, Cisco is reducing its revenue forecast while bumping up its view on earnings. The company now sees full-year earnings of between $3.87 and $3.93 on revenue of $53.8 billion to $55 billion. Previously, it had forecast a range of $3.19 to $3.32 in earnings and $57.0 billion to $58.2 billion in revenue. In any case, the new forecast is not great, as Wall Street is hoping for earnings of $4.05 per share on sales of $57.7 billion.

The after-hours stock decline masks the fact that Cisco delivered strong quarterly results, thanks to it finally being able to deliver pandemic-era orders that could not be fulfilled earlier, said Holger Mueller of Constellation Research Inc. “But now those orders have been shipped, it is faced with weakening demand as enterprise implement those products and the channel reduces inventories,” he explained.

Charles King of Pund-IT Inc. said Cisco has been caught on one of those “damned if you do, damned if you don’t situations”, because it did a great job in recovering from the pandemic-related supply chain chaos and has gotten back its manufacturing mojo. However, he said many of its customers have been slower off the mark. “Many are still struggling to deploy and configure the new kit they ordered months ago, so you can’t really blame them for slowing or stopping orders to deal with the backlog,” King said. “But investors appear to be blaming Cisco anyway, for failing to live up to analysts’ consensus. That may be short-sighted, but no one ever said that life, let alone the markets, are fair.”

In the longer term, Cisco’s prospects do look better. During the quarter, it announced that it intends to buy the data analytics and cybersecurity software giant Splunk Inc. in a bumper $28 billion deal, which would be its largest-ever acquisition. The move catapults Cisco, which is best known for its networking gear as well as other data center equipment, to the leading ranks of cybersecurity providers.

Robbins said at the time the deal was announced that the combination of Cisco’s and Splunk’s data would have real value for enterprises, allowing them to “move from threat detection and response to threat prediction and prevention.” He said it will enable Cisco to become one of the world’s largest software companies.

Besides its cybersecurity ambitions, Cisco has a lot of hope for artificial intelligence in the longer term. During the conference call, Robbins told analysts that his company believes it can win more than $1 billion worth of orders in fiscal 2025 for AI infrastructure from cloud providers alone. He said cloud providers are looking to move to “more of a standard, broad-based technology like Ethernet, where they can have multiple sources” to support AI networking workloads.

Mueller said it’s also notable that Cisco is running a tight ship in terms of its business expenditures. “Investors can be pleased that all of Cisco’s product lines grew during the previous quarter, which has not been the case too often,” he added. “That allowed Cisco to deliver approximately $1 billion in profit on almost $15 billion in revenue. That shows Cisco has kept its cost base constant, resulting in increased earnings per share. Cisco needs to continue this trend.”

The after-hours stock decline means that Cisco’s shares are now up just 12% in the year-to-date, trailing the wider S&P 500 index, which is up 17% for the year.

Photo: Fortune GLOBAL FORUM/Flickr

Networking giant Cisco has announced seven new modules on its Observability Platform, looking to help customers fulfil their specific observability needs and utilise additional value from observable telemetry.

First announced in February 2023 and launched for general availability in June 2023, Cisco Full-Stack Observability is designed to allow teams to bring together telemetry data from their own context and drive correlated insights across the entire IT estate, whether they are DevOps engineers, site reliability engineers, cloud ops, ITOps, line of business or members of C-suite management.

As IT and application environments become ever more complex, observability – the ability to see and get ahead of network-based issues and everything in the tech stack that could affect customer experience – has become a board-level imperative.

Cisco said the background to the launch in February was the battle among consumer brands to gain market share by focusing on the experience customers have in accessing their products and services. This is quickly reaching into the enterprise arena, whereby hybrid workers expect the capability of their IT services to be identical wherever they are. As these expectations increase, Cisco said it was aiming to allow firms to deliver the required digital experiences by staff, customers and partners alike.

The company now says that modern businesses are digitally led, with customer and user experiences achieved with and through applications. It believes the speed and complexity of how these applications are built demands that IT teams, security teams and business leaders observe all aspects of application performance and experience in real time. Yet the company cited a accurate IDC report showing 60% of IT professionals are thinking that most observability tools serve narrow requirements, failing to give IT teams a complete view into current and trending operating conditions. Further, 65% stated the need for a programmable and extensible observability solution that could be used for use cases specific to their own business.

As a solution, the new open, extensible and API-driven stack was built by Cisco’s development partners and created to expand its full-stack observability ecosystem. The new modules are focused on five critical areas: business insights, SAP visibility, networking, MLOps and service-level objectives (SLO), and sustainability.

Business insights functions aim to correlate telemetry data with business performance across multiple domains, providing customers with full visibility and insights on how business interacts with IT. The new platform can now help customers achieve holistic observability across often changeable, expanding and complex SAP landscapes and ecosystems and use Cisco’s networking expertise to correlate key network telemetry with business metrics and application stacks.

With the growing use of generative AI and the mainstreaming of modern applications, the Cisco Observability Platform is also designed to allow customers to monitor these applications, their SLO and bring the monitoring of large language models (LLMs), and MLOps models together with application observability. Cisco also sees the upgrade as being able to help assist customers achieve their sustainability goals by providing data around the carbon footprint across multiple IT domains and help optimise around energy consumption.

Commenting on the launch of the new modules and what they could deliver, Will Townsend, vice president and principal analyst at Moor Insights & Strategy said: “Full-stack observability is unlocking a host of use cases that are providing enterprises with deeper levels of cross-domain visibility for improved application performance, network insights, security postures and assurance. The resulting benefits of reducing risk and improving the resilience of IT infrastructure are immeasurable. [The Cisco Observability Platform] ecosystem has the potential to provide a diverse set of solutions that can help customers reduce tool sprawl and more proactively manage business operations through partner-led observability practices.”

New modules available immediately covering these capabilities are: CloudFabrix - SAP Observability; CloudFabrix - Campus Analytics; Evolutio – Claims; Evolutio – eCommerce; DataRobot – MLOps by Evolutio; Climatiq - Cloud Carbon Insights; Nobl9 – Service Level Objectives (SLO).

The wireless networking space has exploded in accurate years and wireless technologies have become a connectivity game-changer. The advent of fourth-generation (4G) wireless wide-area networking technologies and the emergence of LTE (Long Term Evolution) and 5G technology further underscore wireless networking’s critical role in business today. 

The demand for professionals with wireless networking knowledge and expertise is at an all-time high. As wireless professionals map their career paths, adding respected wireless networking certifications to their resumes can show hiring managers they have the cutting-edge, in-demand career skills to take their organizations to the next level. 

We’ll highlight the best wireless networking certifications IT professionals can obtain to demonstrate their skills to current and prospective employers. 

Credit: Cisco

Cisco has revealed new features, enhancements and tools for partners as it embarks on the biggest change to its incentive program. 

The networking giant has initiated a significant evolution of its flagship incentives to reward partners for selling Cisco hardware, software, and as-a-service solutions. It is also adding six new solution specialisations within the next nine months.

The Cisco Partner Incentive will combine elements from several incentives such as VIP 42; CSPP and Lifecycle Incentives into one integrated view.

It will focus on rewarding partners with rebates to drive predictable and profitable growth and will specifically support new logo acquisition, up-sell, and cross-sell opportunities. 

“The Cisco Partner Incentive is the biggest change we’ve made to partner incentives in more than a decade and is the capstone on the Cisco Partner Program evolution started in 2020,” Cisco vice president of partner strategy and programs Marc Surplus said.