500-710 mission - Cisco Video Infrastructure Implementation 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

Defense personnel are often unsung heroes—potentially putting their lives on the line to serve their communities. Giving back to those who choose to serve, or are transitioning out of the armed forces, is clearly the right thing to do. We’re proud that Cisco Networking Academy partners with organizations around the world looking after the unique needs of current and former military service people.

Training-up down under

Soldier On is a not-for-profit organization delivering support services that enable current and former Australian Defence Force personnel—and their families—to lead meaningful civilian lives. It does this by providing psychology support services, employment support, education programs, and community-building activities.

Amy Cooper, CEO of Soldier On, is particularly aware of those needs—her father-in-law and partner are respectively former and current Australian Defence Forces personnel. Amy also sits on the Royal Commission into Defence and Veteran Suicide reference committee, which gives her an even greater insight into the challenges facing current and former veterans and their families.

In Australia, a Royal Commission is a public hearing, independent of government, with broad powers to summon witnesses or seize documents and receive public submissions. The Royal Commission into Defence and Veteran Suicide was established in 2021 to inquire into systemic issues and risk factors relevant to veteran deaths by suicide, or other lived experience of suicide risk factors, and to provide a systemic analysis of the contributing factors. To date, the Commission has received more than 4,000 submissions.

Unique challenges

“One of the interesting pieces that have come out of the Royal Commission is the fact that around 80 percent of the veterans go on to have really successful civilian lives,” says Amy. “Unfortunately, 20 percent face really significant challenges.”

She says this is significant because an increasing number of service people are transitioning out of the armed forces. “Those numbers have traditionally tracked around the 5,000 mark,” she says. “This year it’s anticipated it will be closer to 7,000 people making that transition, and that number has risen over the last three years.”

“We’re also seeing trends with younger veterans discharging, so from an increased number from 25-year-olds right up to mid-30s, which changes the nature of the support that might be required for transitioning veterans.”

Soldier On is supporting around 11,000 service people, veterans, and their families this year, with programs designed to aid with health and wellbeing, employment support, and education, as well as helping make connections within the community.

Values-driven

“What attracts people to serve their nation is often very values-driven,” says Amy. “It’s about being able to serve and support the community and often they’re looking for roles that have that same altruistic service or are an intrinsic value to them.”

“Cisco Networking Academy is a strong part of our mission, particularly for our veterans and family members to thrive,” she says. “It is really focused on that positive aspect of being able to offer practical support through a range of education opportunities that the partnership provides… the courses have been a great opportunity to get many of our participants into the IT industry.”

“The very nature of the program, being very skills directed, provides good options for participants as they balance serving, or starting to think about that transition time, which is often a very busy time with relocating,” says Amy. “I think that’s a tremendous investment in veterans and their families.”

Helping veterans around the world

Soldier On is not alone in its mission to help veterans transition into new careers. In the UK, TechVets is another Cisco Networking Academy partner that helps more than 20 people per month to start new careers in IT. TechVets was founded to address a fast-growing skills gap with the rise of tech, and a national issue with unemployment and underemployment within the British Military Forces community.

And in the US, Cisco—which has consistently been recognized as a Top 10 Military Friendly Employer—has a range of veteran programs to assist veterans transitions into meaningful IT careers, including Onward to Opportunity, a program run by Syracuse University’s D’Aniello Institute for Veterans and Military Families (IVMF) to help service members, veterans, and spouses on their journey to meaningful employment after military service.

IVMF is also a Cisco Networking Academy partner, dedicated to serving military personnel and part of CyberVetsUSA, a fully-sponsored “veterans-first” workforce development initiative, do amazing work helping veterans transition into in-demand tech jobs.

Cisco also runs CX Apprenticeship Programs in the US and India to develop networking skills for non-traditional candidates leading to the opportunity to interview for the highly technical, customer-facing role of a Technical Consulting Engineer in Cisco’s Customer Experience organization. Around a third of the current cohort are veterans.

Cisco Networking Academy success stories

In France, Arnaud found he wasn’t academically-inclined and joined the Army, where he realized that his colleagues’ lives depended on reliable communications. After serving his country, Arnaud knew his future was in IT, and after undertaking Cisco Networking Academy training now works for a French ISP as a Network Engineer.

Vanessa was in the Brazilian Army while doing postgraduate studies in Computer Networks. Unfortunately, that knowledge wasn’t required for her job. After leaving the Army she became interested in cybersecurity, eventually taking the CyberOps Associate course with Cisco Networking Academy and landing a job as a cybersecurity analyst.

Michael joined the fire service to contribute to his community, but was called up twice to serve in Iraq. An injury ultimately ended his firefighting career, leading him to pursue a career in cybersecurity incident response. Through Cisco Networking Academy training, Michael has found a new passion in the field, driven by his commitment to service and continuous learning.

Transition to tech with

Cisco Networking Academy

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Toronto, Nov. 14, 2023 (GLOBE NEWSWIRE) -- News Summary:

• Ninety-six per cent of organizations in Canada reported that the urgency to deploy AI-powered technologies has increased in their company in the past six months.
• Considerable gaps exist across six key business pillars — strategy, infrastructure, data, governance, talent and culture — with only nine per cent of companies saying they are fully ready to integrate AI into their businesses.
• Companies are racing against time as 55 per cent said they have a maximum of one year to deploy their AI strategy or else it will have a negative impact on business. 

Toronto, Canada, Nov. 14, 2023 — Only nine per cent of Canadian organizations are fully prepared to deploy and leverage Artificial Intelligence (AI)-powered technologies, according to Cisco’s (NASDAQ: CSCO) inaugural AI Readiness Index released today. The Index, which surveyed over 8,000 global companies, was developed in response to the accelerating adoption of AI, a generational shift that is impacting almost every area of business and daily life. The report highlights companies’ preparedness to utilize and deploy AI, showcasing critical gaps across key business pillars and infrastructures that pose serious risks for the near future.

The new research finds that while AI adoption has been slowly progressing for decades, the advancements in Generative AI, coupled with public availability in the past year, are driving greater attention to the challenges, changes and new possibilities posed by the technology. While 78 per cent of respondents believe AI will have a significant impact on their business operations, it also raises new issues around data privacy and security. The findings show that companies experience the most challenges when it comes to leveraging AI alongside their data. In fact, 83 per cent of respondents admit that this is due to data existing in silos across their organizations. 

However, there is also positive news. Data shows that companies in Canada are taking proactive measures to prepare for an AI-centric future. When it comes to building AI strategies, 95 per cent of organizations already have an AI strategy in place or in the process of developing one. In this category, over two thirds (68 per cent) of organizations are classified as either Pacesetters or Chasers (fully/partially prepared), with only six per cent falling into the category of Laggards (not prepared). This could be driven by the fact that most (96 per cent) respondents said the urgency to deploy AI technologies in their organization has increased in the past six months, with IT infrastructure and cybersecurity reported as the top priority areas for AI deployments.

“Canada is experiencing a significant gap in its ability to adopt, deploy and capitalize on AI’s full potential. Business leaders must think beyond the here-and-now, looking ahead to their needs and building the infrastructure to match,” said Shannon Leininger, President of Cisco Canada. “Businesses need to holistically consider the elements of AI readiness so that we can not only take hold of all that AI has to offer, but do so responsibly.”

Some of the most significant findings include: 

• URGENCY: Businesses know they must act. Fifty-five per cent of respondents in Canada believe they have a maximum of one year to implement an AI strategy before their organization begins to incur significant negative business impact. 
• STRATEGY: Step one is strategy, and organizations are well on their way. Sixty-eight per cent of organizations were benchmarked as either Pacesetters or Chasers, and only six per cent were found to be Laggards. Additionally, 93 per cent of organizations already have a defined AI strategy in place or are in the process of developing one, which is a positive sign, but shows there is more to do.
• INFRASTRUCTURE: Networks aren’t equipped to meet AI workloads. Ninety-five per cent of businesses globally are aware that AI will increase infrastructure workloads, but in Canada only 33 per cent of organizations consider their infrastructure highly scalable. Over a half (55 per cent) of companies have moderate or limited scalability when it comes to meeting new AI challenges within their current IT infrastructures. To accommodate AI’s increased power and computing demands, over two thirds (79 per cent) of companies will require further data center graphics processing units (GPUs) to support current and future AI workloads.
• DATA: Organizations cannot neglect the importance of ‘AI-ready’ data. While data serves as the backbone needed for AI operations, it is also the area where readiness is the weakest, with the greatest number of Laggards (18 per cent) compared to other pillars. Eighty-three per cent of Canadian respondents claim some degree of siloed or fragmented data in their organization. This poses a critical challenge as the complexity of integrating data that resides in various sources and making it available for AI implications can impact the ability to leverage the full potential of these applications.
• TALENT: The need for AI skills reveals a new-age digital divide. While 87 per cent of respondents said they are planning to invest in upskilling existing employees, 21 per cent alluded to an emerging AI divide, expressing doubt about the availability of enough talent to upskill. 
• GOVERNANCE: AI policy adoption’s slow start. Only 29 per cent of respondents said they have highly comprehensive AI policies in place, an area that must be addressed as companies consider and govern all the factors that present a risk in eroding confidence and trust. These factors include data privacy and data sovereignty, and the understanding of, and compliance with, global regulations. Additionally, close attention must be paid to the concepts of bias, fairness, and transparency in both data and algorithms.
• CULTURE: Little preparation, but high motivation to make a priority. This pillar had the lowest number of Pacesetters (four per cent) compared to other categories. Twenty-seven per cent of companies have not established change management plans yet and of those that have, 68 per cent are still in-progress. But motivation is high. Three quarters (75 per cent) say their organization is embracing AI with a moderate to high level of urgency, with only a few (three per cent) resistant to change. Boards (83 per cent) and Leadership Teams (84 per cent) are the most likely to embrace the changes brought about by AI with high or moderate receptiveness. However, there is more work to be done amongst employees as a third (33 per cent) of organizations report that employees are either unwilling to adopt AI or outright resistant.

Cisco AI Readiness Index 
The new Cisco AI Readiness Index is based on a double-blind survey of 8,161 private sector business and IT leaders across 30 markets, conducted by an independent third-party surveying respondents from companies with 500 or more employees. The Index assessed respondents’ AI readiness across six key pillars: strategy, infrastructure, data, talent, governance, and culture. 

Companies were examined on 49 different metrics across these six pillars to determine a readiness score for each, as well as an overall readiness score for the respondents’ organization. Each indicator was assigned an individual weightage based on its relative importance to achieving readiness for the applicable pillar. Based on their overall score,  Cisco has identified four groups at different levels of organizational readiness – Pacesetters (fully prepared), Chasers (moderately prepared), Followers (limited preparedness), and Laggards (unprepared).  

Additional Resources: 

• Cisco Blog Post from Liz Centoni
• Cisco AI Readiness Microsite 

About Cisco 
Cisco (NASDAQ: CSCO) is the worldwide technology leader that securely connects everything to make anything possible. Our purpose is to power an inclusive future for all by helping our customers reimagine their applications, power hybrid work, secure their enterprise, transform their infrastructure, and meet their sustainability goals. Discover more on The Newsroom and follow us on X at @Cisco. 
   
Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S. and other countries. A listing of Cisco's trademarks can be found at www.cisco.com/go/trademarks. Third-party trademarks mentioned are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company. 

A staggering 75% of Indian companies express the belief that they have a mere year, at most, to have an AI strategy before their business faces repercussions. The urgency to deploy AI technologies has spiked in the past six months, with IT infrastructure and cybersecurity emerging as the top priority areas for AI deployments.

Cisco Systems Inc. typically announces some new products at its annual reseller event, Partner Summit this week in Miami. But equally important are initiatives to enable its global ecosystem of partners to be more successful by directing them into emerging areas, since about 90% of its business flows through the channel.

As expected, artificial intelligence is a key theme at the event, with Cisco emphasizing the importance of integrating AI into everyday business processes. According to findings from Cisco’s soon-to-be-released AI Readiness Index Survey, approximately 70% of organizations believe their information technology infrastructure is not scalable and, therefore, not ready for AI. The data suggests that many organizations may face challenges in adapting their current IT environments to support the demands of AI.

“AI use cases increasingly require data to be analyzed at the source, in the data center, and at the edge, in a very distributed way,” Jason W. Gallo, vice president of Cisco’s Global Partner GTM Acceleration, said during a pre-briefing with analysts. “Our customers might be tempted to stand up islands of standalone AI servers that will lead to an enormous management burden, security and skills challenges.”

Although the interest in AI is high, the large number of customers that believe their infrastructure is not AI-ready presents an excellent opportunity for partners. Customers may be willing to spend the money to modernize their infrastructure, but many of the ones I’ve talked to aren’t sure where to start. The new AI Readiness Index enables partners to help customers understand where they are and the end state.

To address today’s IT departments’ challenges when deploying AI solutions, Cisco partnered with industry leaders — including NetApp, Nutanix, Nvidia, Pure Storage and Red Hat — to develop Cisco Validated Designs for AI. CVDs can be considered design blueprints for Cisco technology, making it easier for companies to adopt AI without extra complications or create separate, difficult-to-manage systems.

CVDs have been extremely popular for Cisco in other technology areas, such as software-defined wide-area network, security, automation and edge computing. The end-to-end design lowers risks and speeds up time to market, and I expect the AI CVDs to be highly successful.

Additionally, Cisco significantly enhanced its Full-Stack Observability Platform, allowing developers to create custom modules suited to their specific requirements. These modules can help companies gain insights into various aspects, such as sustainability, and drive operational efficiency. The idea is to harness telemetry data and turn it into actionable insights that can be used to Excellerate business strategy.

“We’ve continued to add and enhance the capabilities of our FSO Platform over the past year,” Gallo said. “This has opened up the opportunity for our partners to access those capabilities via open APIs, giving them a chance to develop integrations and their own intellectual capital.”

On the cybersecurity front, Cisco unveiled new security suites focused on user, cloud and breach protection. Gallo explained that this new approach redefines how cybersecurity products are packaged and consumed, promising an integrated, predictable, cost-effective solution. Cisco’s strategy involves identifying the most critical use cases and ensuring its products are compatible with various systems.

Lastly, Cisco shared an update on the Partner Innovation Challenge. The program has seen a surge in participation, reflecting its success in driving new solutions. The sixth annual challenge introduced a new award called Partnering for Purpose, encouraging partners to innovate in areas such as providing digital access, improving work life, tackling climate change, protecting the environment, responding to emergencies, and meeting basic human needs.

I was glad to see the introduction of the Partnering for Purpose award. Cisco has a well-defined purpose of “powering an inclusive future for all,” but it can’t make a big, global impact without scaling up through its partner community. The new awards are focused on improving the world, and I’d like to see Cisco continue to reward partners that make the biggest difference in this area.

This year’s Partner Innovation Challenge winners included grand-prize recipient Ormit Solutions, which developed a Wi-Fi solution for academic and residential communities. Long View Systems, the second-place winner, created a building management system that leverages existing Cisco technologies to deliver energy-efficient, occupant-focused controls. CAE Labs, the third-place winner, built a network intelligence platform that provides customers with a complete view of their Cisco investments through a dashboard.

Over the years, I have heard the speculation that Cisco was looking to cut its partners out of the loop, which would allow the company to retain more margin. In reality, nothing could be further from the truth.

Every Cisco executive I have talked to about this, from Chief Executive Chuck Robbins (pictured) down, continually reiterates the importance of the channel. Day one news is focused on helping Cisco’s partners capture more business in AI, security and FSO, and if the partners are successful, so will Cisco and its customers.

Zeus Kerravala is a principal analyst at ZK Research, a division of Kerravala Consulting. He wrote this article for SiliconANGLE.

Photo: Cisco