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Killexams : Cisco Infrastructure outline - BingNews https://killexams.com/pass4sure/exam-detail/700-703 Search results Killexams : Cisco Infrastructure outline - BingNews https://killexams.com/pass4sure/exam-detail/700-703 https://killexams.com/exam_list/Cisco Killexams : Cisco: Outdated IT Infrastructure Increasing Cyber Vulnerabilities

Aging IT infrastructure is exposing businesses to more security vulnerabilities and cyberthreats, as both malicious actors and those defending companies’ IT systems ratchet up the sophistication of their tactics, according to a report from Cisco.

One of its key conclusions of the Cisco 2016 Annual Security Report is that cyberthreats to companies are multiplying and becoming more complex.

“Adversaries and defenders are both developing technologies and tactics that are growing in sophistication,” the report notes. “For their part, bad actors are building strong back-end infrastructures with which to launch and support their campaigns. Online criminals are refining their techniques for extracting money from victims and for evading detection even as they continue to steal data and intellectual property.”

Jason Brvenik, principal engineer in Cisco’s Security Business Group told BizTech that the company is “now sees the attackers using professionally designed, architected and scaled architectures. They’re not fly-by-night operations.”

The Threat of Old Infrastructure

The report notes that connected and digitized IT and operational technology are critical elements for any business today, resulting in the need for companies to make IT security a top priority. “Yet many organizations rely on network infrastructures built of components that are old, outdated and running vulnerable operating systems — and are not cyber-resilient,” the report states.

Cisco says it “recently analyzed 115,000 Cisco devices on the Internet and across customer environments as a way to bring attention to the security risks that aging infrastructure— and lack of attention to patching vulnerabilities—present.”

The company looked at the devices as they would be seen from the Internet, an “outside in” view, and found that 106,000 of the devices — 92 percent of the sample — had “known vulnerabilities in the software they were running.”

Cisco also found that the software in those devices was outdated and vulnerable, containing 26 vulnerabilities on average.

“In addition, we learned that many organizations were running outdated software in their network infrastructure,” the report notes. “We found some customers in the financial, healthcare and retail verticals using versions of our software that are more than six years old.”

Why are there so many vulnerabilities? “Reliability breeds complacency,” Brvenik says. “We know that breaches drive vendor behavior to Improve security. We haven’t seen large-scale infrastructure attacks. We think it’s a latent issue and that organizations need to plan to protect their infrastructure in much the same way they protect their compute plans.”

Security Professionals Lack Confidence, but Boost Preparedness

Cisco surveyed chief security officers and security operations managers in 12 countries to get information on the state security threats and defenses, Brvenik says. The survey found that security professionals’ confidence in their ability to respond to threats compared has declined since 2014.

“For example, in 2015, 59 percent of organizations said their security infrastructure was ‘very up to date,’” the report notes. “In 2014, 64 percent said the same. However, their growing concerns about security are motivating them to Improve their defenses.” 
 Cisco attributes the falling confidence levels to “the steady drumbeat of high-profile attacks on major enterprises, the corresponding theft of private data, and the public apologies from companies whose networks have been breached.”

Threats are growing more sophisticated, but that is also pushing security professionals to protect their networks more. “For example, we are seeing more security training, an increase in formal written policies, and more outsourcing of tasks such as security audits, consulting and incident response,” the report says. “In short, security professionals show signs that they are taking action to combat the threats that loom over their networks.”

According to the report, “more companies (66 percent) have a written, formal security strategy in 2015 than was the case in 2014 (59 percent).” Additionally, 90 percent of respondents said that security awareness and/or training programs are delivered to security staff on a regular basis, the first time in Cisco’s surveys that the 90 percent threshold had been reached on that question, Brevnik says.

Yet Cisco warns against complacency. “The moves toward training and outsourcing are positive developments, but the security industry can’t stop there,” the report states. “


It must continue to increase its use of tools and processes to Improve the detection, containment and remediation of threats. Given the barriers of budget limitations and solution compatibility, the industry must also explore effective solutions that provide an integrated threat defense.”

SMBs not Investing as Much as Enterprises

According to Cisco, small and mid-size businesses (SMBs) are not devoting as many resources to IT security as their larger counterparts. “For example, 48 percent of SMBs said in 2015 that they used web security, compared to59 percent in 2014,” the report notes. “And 29 percent said they used patching and configuration tools in 2015, compared with 39 percent in 2014. Such weaknesses can place SMBs’ enterprise customers at risk, since attackers may more easily breach SMB networks.”

More often than not, the report found, “SMBs are less likely than large enterprises to have incident response and threat intelligence teams.” This could be because they lack the resources to dedicate to such teams. The report found that 40 percent of respondents at companies with fewer than 500 employees cited budget constraints as the biggest obstacle to adopting advanced security processes and technology.

“In addition, of the SMB respondents that do not have an executive responsible for security, nearly one-quarter do not believe their businesses are high-value targets for online criminals,” the report says. “This belief hints at overconfidence in their business’s ability to thwart today’s sophisticated online attacks — or, more likely, that attacks will never happen to their business.”

Sun, 13 Nov 2022 10:01:00 -0600 Phil Goldstein en text/html https://biztechmagazine.com/article/2016/01/cisco-outdated-it-infrastructure-increasing-cyber-vulnerabilities
Killexams : Cisco Systems, Inc. (CSCO) Management Presents at Barclays 2022 Global Technology, Media and Telecommunications Conference Call Transcript

Cisco Systems, Inc. (NASDAQ:CSCO) Barclays 2022 Global Technology, Media and Telecommunications Conference Call December 7, 2022 3:10 PM ET

Company Participants

Bill Gartner - Senior Vice President, GM Optical Systems and Optics Group

Conference Call Participants

Tim Long - Barclays

Tim Long

Good. Yeah. Hello, everybody. Thank you for joining us here for this session with Cisco. Tim Long here, IT hardware com equipment analyst at Barclays. Very happy to have Bill Gartner with us, SVP, General Manager, Optical Systems, and Optics Business Unit. Looking forward to the discussion, pretty hot syllabu area for Cisco and for the industry.

So, I think Bill's going to read a safe harbor and then maybe after that if you wouldn't mind just kind of give us a little overview of your roles and responsibilities at the areas that you're covering …

Bill Gartner

Right. Thanks Tim. First of all, thank you for having me. And before I start, I will be making some forward-looking statements that are subject to risk and uncertainties as outlined in our disclosures. Have I got all that right, Marilyn? Good. Okay.

My name is Bill Gartner and I responsible for two businesses in Cisco that, that are related by the fact that they both rely on optical communications. One is the optics business and the other is the optical systems business. And you can think of the optics business as the trans receivers that we sell with routers and switches that find their home inside a data center or inside a central office or within a campus environment. Those receivers are used typically to send optical signals on a fiber over relatively short distance like 10 kilometers. That's the optics business. And we serve all markets with that, that that includes the campus environments, enterprise, commercial, public sector, service provider and web.

And then the other businesses. Once you have to leave the data center and now send an optical signal across a city or across a country or even between continents, now it's a much more difficult problem to send that optical signal and it requires much more sophisticated solution that is classically chassis based. It's a chassis that we have to sell for an optical system to carry these signals reliably over very long distances. And the other thing that's unique about that world is that in a data center, when you add a new router or switch, you pull new fiber to every port on that router or switch because you're inside. You can do that.

When you leave the data center, now you're talking about crossing the Mississippi or crossing the Rockies, and you basically have to use the fiber that's in the ground. And so we have to put lots and lots of signals on one fiber. So, optical systems are what we use outside the data center or central office and optics what we use inside. That's the two worlds that I have. They're very different businesses, very different business models, but they're related by common technologies.

Question-and-Answer Session

Q - Tim Long

Great. Great. Thank you for that. Good start. So, maybe across the two businesses talk to us a little bit about kind of your priorities, looking out the next few years, obviously you've done the Acacia deal and integrated, you got routed out optical networks. There's just a lot going on, right? So, maybe talk about two or three of your priorities, then we'll dig more into it.

Bill Gartner

So, on the optical system side, we've just introduced a new optical layer platform called the NCS 1010 that offers some very innovative capabilities for customers to simplify operations. It runs IOS XR, which is our routing operating system. So, it's common for customers that have deployed our routers and it supports CNL band. So, massive capacity. That's our -- you can think about as a layer zero solution. We've just launched that.

And the other key thing for the optical systems business that we have under development is leveraging something that Acacia announced, which is a new DSP supporting 1.2 terabytes on a single wavelength, 1.2 terabytes on a single wavelength. And we'll be trialing that in second half of next year and we'll have that available in fourth quarter of next year. Those are two key development areas for the optical systems business.

And then on the optics side, we're I think still early stage on 400 gig deployments. So, a lot of effort in terms of getting 400 gig out there to our customers. We are also very focused on selling Cisco Optics, not only for Cisco routers and switches, but for third-party solutions as well. So, when customers want to consider optics as a buying center and say they want to consolidate their optic spend, we want to be considered as an optic supplier.

And then I think the one thing that's crossing the systems world and the optics world is Acacia has a very significant innovation in something called a 400 gig ZR or ZR Plus, which is effectively taking what was classically delivered in a chassis as part of an optical system and putting that into a plugable form factor. And that is a 400 gig ZR or ZR Plus. And that's part of our routed optical networking architecture. So that's an important thrust for really the optical systems business and the optics business.

And if you give me a minute here, Tim, I actually brought some show and tell, I'm going to try to make that a little crisp for you because I know you guys don't live in this world. This is is a line card that goes into an optical system. We sell this to all the web players, service providers. This is -- this supports 1.2 terabytes of capacity and it goes plugs into a chassis with a bunch of other line cards that plug into a chassis. So, for 1.2 terabytes, the customer basically can put -- get two trunks, if you will, or wavelengths, and they can combine up to 1200 gig interfaces. So, this 1200 gig ports here, and out comes to 600 gig ports. That's where the 1.2 terabytes comes from. This is part of an optical system.

And what we're doing with ZR pluggable is effectively now using -- taking what's in there, largely speaking and putting it in here. Now it's not quite apples-to-apples. This is a 400 gig plugable, that's 1.2 terabytes. So, you'd need three of these to get to one of those. But from a cost, power, space perspective, this is way, way, way more efficient for customers than that. And so, if you think about it, I own this business, which is part of Acacia. I own this business, which is part of our optical systems. I'm going to cannibalize a part of this business in order to make this business successful. And we're okay with that because we own both businesses, but we think there's more potential for this business over time. Does that help?

Tim Long

Yeah. Yeah. I'm glad you didn't have to take an airplane to get here.

Bill Gartner

By the way, my supply chain lead always is terrified when he sees me walking around carrying his stuff in a shopping bag. But we're not going to plug it into any customer's network.

Tim Long

So, Maybe we'll start with this routed optical networks, ZR, ZR Plus. So, ZR, ZR Plus admittedly has been slow, right? Maybe talk to us a little bit about why it hasn't developed as quickly as most in the industry had expected. Why is that going to be different? And touch on the length power, some of the key issue -- technical issues that need to be tackled or tackled.

Bill Gartner

So, let me disagree with you on one point there, Tim. I think for the web players, ZR and ZR Plus not all the web players, but many of the web players are deploying it in massive volume. And that's characteristic, I think, of the web players. They are quick to adopt new technologies. They don't have a lot of overhead in terms of processes and operations to get in the way. They don't have a lot of legacy. So, when there's a new technology that offers significant benefits in terms of power, space, cost, they can jump on it very quickly. And so, we were at capacity for much of the last year trying to serve that segment of the market with ZR and ZR Plus.

For the service provider market, which is traditionally deploying like chassis-based solutions, there's -- we're on a journey that is not going to happen overnight in part because they've deployed these systems which have a lot of life left in them. And so, they're not going to jump to a new architecture overnight. There's also operations -- some operations differences that they have to accommodate in moving from a world of chassis-based solutions to a world where you plug this into a router. But we're seeing very good traction there. We've deployed to over 20 customers now. I'm very confident that over time -- this is going to be a five-year journey. This isn't going to happen overnight. But over time, this pluggable is going to replace that transponder in many, many applications and service provider markets. So, I don't think the journey has gone any slower than we expected. I think we anticipate that for service providers, it is always a much slower transition to a new architecture. And this is a new architecture. It's not just sort of a new technology. And -- but I think we're on pace with where we expect it to be.

Tim Long

Okay. And part of the architecture is to remove the full optical system from the network?

Bill Gartner

So -- yeah. Let me just outline kind of at a high level what routed optical networking architecture is about -- because there's a lot of [indiscernible] out there that my competitors love to throw out. There's some misinformation on that, too. Part of it is replacing this with this. That's part of routed, and it's a big part of routed optical networking. Some think that's all it is. It's not simply that although this is where a lot of the CapEx and OpEx and power savings arises from this, but routed optical networking really came about when we looked at the scale of routers, what's happening in ASICs that's allowing routers to scale so dramatically. It wasn't too long ago.

When I came to Cisco -- I've been with Cisco 14 years. And when I came to Cisco, we had a 40-gig line card on a router, and it had 14 ASICs. And now we've got one ASIC, one ASIC that does 19 terabits of capacity. And that’s not going to go to 25 to 50 over time, one ASIC instead of 14. Nominally, you can kind of think of it as the cost of an ASIC of the cost of an ASIC. So every time like I take 14 down to seven, down to three, down to two, down to one, I'm getting cost savings, but I'm also packing much more capacity now into that one. So that's driven down the cost per bit on a router very, very dramatically over the last 10 years. It's also driven down the power per bit, because now we have one ASIC rather than a whole bunch of ASICs. So, the cost per bit on a router has come down dramatically over the last 10 years.

When we started building networks with an IP layer and a DWDM layer and sometimes an OTN layer, the motivation for that was that the router was the most expensive resource in the network. It was by far the most expensive thing in the network 20 years ago. And what we did is we -- as an industry is we basically built layers of the network to bypass routers whenever you needed to. So, if you had to go from A to B to C to D to E and you had some demands from A to E, it was very expensive to go through B, C and D to get to E. So, we went around B, C and D with an optical layer using things like ROADMs. And that made sense economically. That really made sense from a technical and an economic perspective. But now the cost of the router has come down so dramatically that it's actually more expensive to go around those routers than it is to go through them.

So that was -- that's one key insight that drove routed optical networking is it's no longer more cost effective to go around the router than it is to go through it. And in fact, what we did as an industry is we built a lot of these bypass wavelengths that have very little capacity on them. So, we can now take advantage of the IP layer, aggregate a whole bunch of demands and basically go through routers rather than around them. And so that simplifies the network in a very significant way because you can simplify the DWDM layer. It doesn't go away. To be clear, the DWDM layer is still there, but it's simpler. It can be much simpler. You can take advantage of these pluggable optics. And if you can take private line services like a T1 service or an OTN service and now put it on the IP layer with something called private line emulation, you can take those private line services that were traditionally served with custom products, put that now on the IP layer. Now you can get down to one layer in the network. Instead of having IP, OTN, DWDM, you can have just the IP layer. And that simplifies operations, it simplifies planning, it simplifies life cycle management. So that all together, it's private line emulation. It's the idea of rethinking how traffic moves through the network. It's pluggable optics, and now it's automating all of that with an automation infrastructure. It's really those things that make up the routed optical networking architecture.

Tim Long

Okay. Great. Great. Maybe sticking on the system side for a little bit. I'd say if you look at Cisco's industry share or anything like that, it's not where it is in routing. Talk a little bit about owning a lot more of the IP and the optical layer. Does that help new products like the NCS 1010. It's real catchy name you got there, that one. Just talk a little bit about kind of that vertical integration and what that can do for you even outside of routed optical networks or the traditional systems business.

Bill Gartner

So, let me say something you probably don't hear a lot out of somebody from Cisco is, I don't aspire to be number one in optical. That's not my goal, to be number one or number two in that market. The optical portfolio for Cisco is more of a portfolio play for Cisco. When customers want to buy optical and routing from one vendor and want basically an integrated solution, we're there for them. That's not to say we don't sell optical standalone because we do, but it's opportunistically that we go after those standalone plays. I don't have an objective to be number one in optical. In fact, as I mentioned earlier, when we do -- when we replace this with this, this is the profit pool in optical.

This is the most profitable part of the optical system. There's other elements like the ROADMs and things like that, that are really common infrastructure that don't go in with high margins. This is where the margins are, and we're going to replace it with this. And when we sell this, we're going to count it as part of our routing sale. So, effectively, I'm going to take down the optical business in support of routing. And we have strength in routing that we're going to leverage. So, this is very much a portfolio play where we're looking -- I'm wearing a Cisco hat and saying it's good for Cisco to leverage our relative market strength in routing. And I may have to cannibalize the optical business in order to do that, and we're willing to do that. And we think that's the right thing for our customers, we think it's the right thing for Cisco.

Tim Long

Okay. Maybe just last on this topic. The optical system vendors that are trying to add routing as a software layer or something, why does that not work as a solution?

Bill Gartner

I will never say never, and I don't discount our competitors. We've got 25 years of investment in routing with a couple of thousand people writing software. Hard won lessons and building very large-scale networks around the world, and it's a hard problem. So, I wish them luck if they're undertaking that.

Tim Long

Yeah. Okay. Good. The -- maybe back to kind of the optics side. You talked about still being relatively early in 400-gig deployments. Kind of talk to us about that evolution and how you see the next timing and scale for the next few versions.

Bill Gartner

Yeah. Well, first -- one thing I would want to be clear about is depending on which market segment we're talking about and even within market segments, different customers, the lifecycle for a given technology can be very, very long. But we're still selling -- we're still selling a ton of 10-gig optics, a ton of 10-gig optics. And 10-gig was around 20 years ago. And so, I think the tail for things like 100-gig and 400-gig is a very, very long tail. And without generalizing too much, what you see is web will adopt a technology like 100-gig very quickly and jump to 400-gig very quickly and then jump to 800-gig, and they'll jump to 1.6T. The service providers are going to be -- to have a much longer timeframe for deploying that technology, easily 10 years for something like 100-gig, easily. And they are going to generally be slower in jumping on a 400-gig bandwagon or an 800-gig bandwagon. They'll be slower jumping on it and then have a much longer time of deployment.

And then when you look at something like enterprise, it's much, much later and much, much longer. So like most of my 10-gig or 1-gig, we still sell a ton of 1-gig is going in enterprise applications. So these technologies have a very, very long tail. And if you ask like what's Google going to do or what's Facebook or Amazon are going to do, you get a very different answer than if you ask what Bank of America might be doing or what AT&T might be doing.

Tim Long

Okay. And then talking about the big hyperscalers what kind of trends are you seeing there? And I'm assuming as capacities go higher, there's got to be optical -- much more optics around -- we know each generation of switch has more optics. So, maybe talk about the trends there and what you think that means for the business.

Bill Gartner

So, let me talk both inside the data center and outside the data center. The -- inside the data center, 400-gig is pretty well being deployed right now by the web players. That's, I would say, entering maturity. It's still relatively early stage, but entering maturity. 800-gig is probably coming in the next couple of years. And 800-gig will be a little different than what we've seen in previous technology jumps in that 800-gig will be on a router port, it will support 800-gig, but the optic itself will likely be 200, 400-gig side-by-side, packaged into one optic. And we do that for technology reasons and cost reasons. So, it will be a longer time before we see 8000gig on the optics side.

It's also an issue of compatibility. If they've got a lot of 400-gig out in their data center and they put an 800-gig optic that has two 400-gig ports effectively on it, they can connect it to an existing 400-gig. So, there's a life cycle management issue there as well. Pretty mature inside the data center for 400-gig, but I'd still say, there's a lot of growth there still ahead of us.

Once you leave the data center, the web guys have metro networks and long-haul and subsea networks. So, those are three very different markets. I think the metro markets for the -- or data center interconnect market for the web players are largely going to go to this. For a couple, they're already there. Like this is exclusively what they're deploying. For others, I think they'll get there. Once you leave the metro area and get into long-haul or subsea, then I think this -- which has higher performance than the pluggable supporting -- this can support many thousand kilometer applications. This was maybe up to 1,000 kilometers today. They'll still deploy something like this, a chassis based solution.

The other thing I would say is we're -- for the last 20 years, the industry has been sort of a game of leapfrog of let's go from 2.5-gig to 10-gig to 25-gig to 40-gig to 100-gig. And every time you do that leapfrog, you get more capacity on the fiber. We are now approaching the point where we're just -- we're hitting what's known as Shannon's limit. We're just going to be out of gas on the fiber. So, we can't play that game anymore. Like our next-generation DSP coming out of Acacia will deliver 1.2-terabit on a wavelength, but the total fiber capacity that can be supported isn't moving that much. So, we can get a little bit better economics with a 1.2-terabit wavelength and maybe a 600 or 800-gig wavelength, but we're not really moving the needle in a significant way in terms of the total capacity. And then if you ask what's beyond that, it's very little incremental gain that we can get in terms of the total capacity you can put on a fiber. So, then we have to turn our attention to things like power or cost and say, look, the game is going to be who can drive to a lower power consumption on these things. It's not necessarily a game of capacity gain.

Tim Long

Interesting. Interesting. One of the priorities you talked about was third-party for optics. How do you go about that? How difficult is that to really start moving the needle on that business?

Bill Gartner

So, I think we've made good -- I think we're early stage in there. We've made very good progress with some very key logos. When a customer -- and now I'm talking primarily about service provider customers, because web is a little bit in a different category. But when a customer decides, for instance, that they want to consolidate their optics spend because the optic looks the same to them for whether they're plugging it into Cisco or Juniper or Nokia, we want to have a seat at the table for that conversation because we put optics through a certification and qualification process that is absolutely unparalleled in the industry. No provider of optic, no other vendor, whether it's Juniper or Arista or Nokia, does the level of certification on an optic that we do.

So, we can give our customers very high confidence that when they buy the optic, it will work in any host and it will work under all operating conditions. That means temperature variation, humidity variation, voltage variation, all these different permutations we test for, and we have a diverse supply chain. We make sure that even when we're sourcing the optic ourselves, even when we design and build the optic ourselves, we still have second sources for either all the technologies that go into that or the optic itself. So, we can take that supply chain management issue away from our customer and say, look, we will guarantee you that there's diversity in the supply chain. We'll guarantee that when there's typhoon in Thailand or an earthquake in Japan that takes down a good part of the optics supply chain, that we've already thought about that. And that gives our customers comfort. So, it's more than just does the optic work because the optics are fundamentally commodity. We make sure that we can guarantee it's going to work under all operating conditions and that we can diversify the supply chain on behalf of the customer. So, with that value, I think we have a good selling proposition to customers.

Tim Long

Okay. You mentioned supply chain, I didn't, but now I have a follow-up.

Bill Gartner

Sure.

Tim Long

So, maybe talk a little bit -- it's challenging, it's whack-a-mole and golden screws and all that stuff. So, where are you guys now looking on your business? How are you feeling about supply chain and volumes?

Bill Gartner

So, I would separate -- optics, I think, is in pretty good shape. We're heading down to back to like four-week sort of lead times. There are hot spots. So, we're not there yet, but we're heading there. And for many optics, we are -- we're within four-week lead time right now. Optics has not suffered in general from some of the other areas like the high capacity ASICs, the semiconductor industry has not hit as much in the optics area, and things like power supplies have not been a real constraint for the optics themselves. The optical systems are still on pretty long lead times, like 35, 37 week lead times, but we are seeing those come down as well.

I would characterize it as, I think there's daylight. We see daylight, we see improvement ahead. We're not out of the woods. This is not a mission accomplished statement yet. There is a whack-a-mole issue going on where there are some trouble spots we're still dealing with, and then there are some just pop up randomly that we still have to deal with. So, we're not out of the woods yet, but we're in a far better situation now than we were a year ago.

Tim Long

Okay. Just curious, obviously, you have Acacia and some real base level technology and IP. Could you talk a little bit about the broader Cisco-Silicon One and having silicon capabilities in addition to the optics? How does that better position you relative to maybe some optical or optics pure-play companies?

Bill Gartner

So, one thing, I think from an Acacia perspective, we worked really hard to vertically integrate as much as possible on the design and development side and really own all the key technologies there. And I think we're at a point where we can say that for all the key technologies that go into that optic, we've got ownership of that technology. That gives us control over the design, the performance, ultimately, the cost and it gives us comfort that we can manage those trade-offs between the various pieces in the optic.

I think it was December of 2019 that we made a pretty big announcement that we were going to shift our business model to support a component business model. So, in addition to doing our traditional systems business of selling fully integrated routers and switches with software and hardware and services, we were going to meet our customers where they want to be met. If they want to buy just the optic from us, not buy any of our systems, we'd sell them the optic. They want to buy just the silicon from us, like Silicon One, none of our systems, none of our software, we'd sell Silicon One. If they want to buy just our software or just our hardware platform and put their own software in it, we would do that. Very different business model for Cisco, has supply chain implications, has inventory implications, cash cycle implications. And it's fundamentally a different way we think about managing a business.

I think that, that opened up business for us with the web players, in particular, who were the main target for that whole announcement to say, look, if you want to go build your own, we want to be part of that solution with you. We don't want to be on the outside looking in. So, if you want to use our silicon, we'll be happy to work with you. And we now have customers buying only our silicon, only our optics, only our hardware platform with no software, putting their own software on or putting something like SONiC on it. Every combination you can possibly imagine, we are now to some customer offering. And I think it's opened up a lot of possibilities for us that we don't see many of our competitors being able to match with both silicon and optics.

End of Q&A

Tim Long

Okay. Great. Perfect. End time here, so thank you, everybody. Bill, thank you so much very much. Really appreciate it. Thank you.

Bill Gartner

Tim, thank you very much. Appreciate it. Appreciate you having me. Thanks, everybody.

Wed, 07 Dec 2022 12:06:00 -0600 en text/html https://seekingalpha.com/article/4563107-cisco-systems-inc-csco-management-presents-barclays-2022-global-technology-media-and
Killexams : Cisco Systems, Inc. (CSCO) Raymond James Technology Investors Conference Transcript

Cisco Systems, Inc. (NASDAQ:CSCO) Raymond James Technology Investors Conference December 6, 2022 9:45 AM ET

Company Participants

Kip Compton – Senior Vice President-Strategy and Business Development

Conference Call Participants

Simon Leopold – Raymond James

Simon Leopold

Folks, thank you very much. My name is Simon Leopold, Raymond James' Data Infrastructure Analyst, here at our in-person tech conference in New York. It's exciting to see people again, to get dressed and to put shirt on with buttons and shoes, nice change, but we've got a session now with Cisco, Kip Compton.

So Kip, to get started, we've known each other for many years, crossed paths many times. You strike me as sort of the ultimate utility player. You've done a lot of things at Cisco side. I almost feel like no question is out of bounds, but I'm sure they are. So to help us maybe set the context for our conversation and the boundary conditions, maybe tell us a little about your current role and current focus. And we'll dive into the outline. And folks, if you have questions, raise your hand, we'll try to take questions from the audience as well.

Kip Compton

Thanks, and it's great to be here in-person. I think we've had shirts with buttons for a while, but shoes and all the rest of it is great as well as seeing everyone in-person. Before I jump in, I'm compelled by my Investor Relations team to say that I'll be making forward-looking statements that are subject to the risks in our latest filings.

With that out of the way, I've been – as you mentioned, I've been at Cisco a long time, I've done a lot of different roles. I'm currently Senior Vice President for Strategy and Business Development, for a business that internally we call Cisco networking. We're trying to simplify things, including with our organizational names.

In terms of our external reporting segments, that roughly maps to Secure, Agile networks as well as Internet for the future and represents the majority of the product revenue in business at Cisco.

Simon Leopold

And I guess in terms of, I've got sort of my notion of what to ask you about, but I think it's important for us to understand what are you spending most of your time on? What's – what are you occupied with? What do you – what keeps you busy?

Kip Compton

Yes, it's a large business. And so when you think about strategy and business development, I spend a lot of my time thinking about how can we grow the business, how can we generate more differentiation in our products that are valuable to our customers.

I spend a fair amount of time on inorganic activity as I think people who are familiar with that know you send more time on deals that you decide not to do than you do, and those are pretty important. And I spend time working with our go-to-market teams, understanding how we can accelerate the business.

Simon Leopold

And the volume question is a macro question, but I want – I understand. I want to ask it in the context of your job. But given we've got a strong U.S. dollar, recession worries, various changes by regions and products, how are you thinking about those elements influencing the way you think and what you're working on?

Kip Compton

Well, I'm in the product, our research and development side of Cisco. So we tend, frankly, to take a longer view. So we pay close attention to macroeconomic forecasts in terms of our operations and understanding how we should be managing our supply chain and our forecast and our sales and all that.

But in terms of our strategy and our research and development, we're looking out a three to five year sort of timeline. And we have – I mean we've seen – you mentioned some of the strong dollar for us over – I think 90% or more of our revenue is actually dollar denominated, and we do have some hedges in place for some of our costs. So we've so far seen a fairly material impact from that.

And in terms of softness, I mean, I think on our call, we mentioned we've seen some areas of softness, including in Europe. On the other hand, I think we just had our second biggest first quarter bookings number in the history of the company, second only to last year when things were jumping as people were building out networks in the pandemic.

So we're monitoring the situation, but we've also seen – I mean, Gartner recently published a report, surveying IT folks and companies. And I think 51% of them said technology was the last area that they plan to cut. So we're watching things carefully. We're investing for the future in R&D, but we're seeing some resiliency right now.

Simon Leopold

And the succinct next question is lessons learned from the pandemic. And what I mean by that is prior to the pandemic, maybe you might sole source certain components that now you multisource. So how has the experience in the last couple of years affected the way you think about long-term strategy?

Kip Compton

Yes, absolutely. I mean it hasn't fundamentally changed our strategy. That said, we learn and adapt to an environment just like everyone else. And so where we may have had our supply chain more optimized for certain things as we're in a time of uncertainty, clearly.

Right now, I think there's a lot of exogenous forces, certainly the pandemic and now the geopolitical environment. Our supply chain team and everyone else is adjusting to the environment that we see, going forward.

Simon Leopold

And so Cisco hosted an analyst meeting. Was it September? Lights are blur, seemed like that. But it was the first analyst meeting that the company hosted in a while, and you outlined at the time a TAM growing to $900 billion, which is pretty big. So I'm not asking you to repeat the entire content of the meeting, but help folks understand really what are the big growth drivers, what are kind of the most exciting transitional aspects of what's influencing that kind of massive TAM.

Kip Compton

Yes, absolutely. And I think you're referring to our Investor Day in September 2021. For folks who might want to look that up, all the materials are online. I think what I would say in terms of drivers over the next, let's say, three to five years, certainly, we're seeing hybrid work, IoT and then the web scalers as being three good drivers for us.

On the hybrid work side, the immediate thing you think of is our collaboration portfolio, and particularly, we believe with some of the devices that we have as companies are outfitting their campuses for hybrid work and realizing basically that every meeting is going to be a video meeting, and so every conference rep needs to have that equipment in it, that's an opportunity for us.

But in my job on the networking side, we're focused on the opportunity with the networking. And we're seeing that whenever a meeting is a video meeting because every meeting will have some remote participants, the load and the traffic on the campus networks is intense.

And that's driven a wireless and campus upgrade cycle that we think is fairly durable. That along with the traditional generational upgrades for WiFi 6 is – WiFi 6 has been very good. We're seeing 6E now kicking into gear as well.

On the IoT side, we're seeing people putting sensors into carpeted spaces and starting to use these to understand occupancy, to understand and optimize their energy usage. And actually, our office here in New York, there's some videos online Wall Street Journal just did a feature on it, where we renovated and put these technologies in as a good showcase for that.

On the web scaler side, we just continue to ride the growth there. I mean we saw a strong double-digit growth in our first quarter that just ended. We're really excited about the pipeline of technologies that we have to offer those folks and expect that to continue to drive growth as well.

Simon Leopold

So one of the things that I suspect is the way Cisco operates is the business units are sort of given their targets and you run with it, you run your business. And as long as you're running it, go. And so when we think about the – essentially, moving strategy to execution, that's the mystery to me from – as an outsider observing it. So you're looking out years and your colleagues are busy working on day-to-day, what's the process? And how does it go from your vision and your activities out years to come into the business day-to-day?

Kip Compton

Sure. Well, one thing I'd say, I mean, as you mentioned, you've known Cisco for a long time. So it's – I think it's a good observation of how we've treated our businesses in terms of autonomy. I would say, we formed the Cisco networking organization that I'm part of, we just formed in October.

And we actually brought together all of our networking businesses across both service rider and enterprise, for instance, really looking to be able to get more synergies and deliver more integrated solutions. So we're actually blending that classic model with more governance and more sort of big-picture thinking, so that we can get more efficiency as well as more differentiation.

In terms of how strategy works at Cisco, we have an annual long-range planning process, where we build three to five year plans that outline financial forecasts as well as strategies and areas that we want to enter investments we want to make. Those are presented and discussed with our CEO and his staff.

Once those are in place, we actually translate those into strategic intents for each of our businesses. And we work – my team actually works with them quarterly to monitor the progress against what needs to happen to have those strategies in place.

As well as in this environment, frankly, if there are any changes that would cause us to tweak our strategy, we're not changing strategy every quarter, of course. But depending on what's happening in the world, we might decide that an element of it should be sped up or another element maybe a little bit relatively less important. And then we repeat that process on an annual basis. So we feel good about that model.

Simon Leopold

So I want to ask about what the R&D priorities are. And I imagine there's a one-word answer, which is software. So let's go a little bit deeper.

Kip Compton

Absolutely. So when I think about it, I think in terms of two buckets for R&D, one is core technologies, and the other is essentially experiences that we're looking to invest in to deliver to our customers. So I think the core technology side, no big surprises there. By the way, software is big, but we're continuing to invest heavily in our ASIC strategy, right? Our Silicon One ASIC strategy is very important. We’re investing in our optics, which is highly differentiated and something that’s helped propel our webscaler success. We’re investing in core networking software. I think some of the things that we’ve made our name on and that we lead the world in. And we’re also investing heavily in security. So those are some of the core technology areas that we think are just important long-term plays, and that we’re pouring R&D investment into.

On the experience side, we’ve seen that what customers want is simplicity. And the way we think about this is what kind of experience. These core technologies are amazing. They enable essentially the modern world. But if you can’t operate it and you can’t get the outcomes out of it that you want, it’s not very compelling. And so investing in things like Meraki dashboard and what we announced last summer, and bringing Meraki across our whole portfolio is a big part of what we invest in as well.

Simon Leopold

Now, you did make a comment earlier on about inorganic efforts, and having filed Cisco for a while, I’ve observed the strategy that, I guess, we call outsourced R&D maybe that’s a common term. But you’ve invested in private companies historically, often they become acquisitions. How do you think about that particular strategy? It may be my imagination, or it just seems like you’ve made fewer acquisitions over the last 12 months than the prior period. But there could be a lot of variables there. So maybe update us on how Cisco thinks about that strategy.

Kip Compton

Sure. So, internally we have what we call our build by partner framework. And whenever we’re looking at a new capability or getting into a new business, we’ll ask ourselves and we’ll often actually do the analysis, scenario-based analysis, hey, if we built this ourselves, what does that look like? How long would it take? How much would it cost? What kind of differentiation could we build with our technologies and our engineers? If we partnered, what does that look like?

We don’t need to do everything ourselves. We have great partnerships across the industry, including somewhere we put things on our price list where it makes sense. And then last, and the one that generates the headlines is the buy, the acquisition case. And we’ll look at what targets are out there, what would that likely cost, what kind of cultural fit? I mean, you buy a company and you get the technology, but the team bolts, that’s usually not a value creation event for us.

And so we’ll actually map out all three of those and then sit down and look and decide, what’s the best path for each area. To your point about acquisitions, we don’t have a quota. It’s like, I’d have to go look at the numbers, my perception’s kind of aligned with yours. But we don’t have sort of a plan at the beginning of the year, oh, we’re going to buy this many companies because we do look at it through this build by partner. And what we do depends on the outside environment, where – what targets are available and what makes sense from a business perspective.

Simon Leopold

And in terms of the criteria, you mentioned cultural fit, I hear that over and over and over again. What are some of the other criteria used in making these decisions?

Kip Compton

I mean, some of the criteria are somewhat deal specific. So I don’t want to suggest like we have like a scoring, rubric or something, if only it was that easy. I think how complimentary the technology is, like maybe it’s obvious, but if we’re looking for a particular capability or product and the company has it, but it has a whole bunch of other stuff that either overlaps with what we have or has things that we would not want, and so we would be potentially exiting. Those tend to not be very good deals.

Where the mission – where we buy a company and then are like, oh yes, we’re going to change what you do. We’re going to take you in a different direction after we buy them. That’s often a little bit of a warning sign. I mean the general thing that I tend to think about a lot, I mean, the strategic fit is kind of obvious. The thing that I think about a lot of times is the fact that it is far easier to buy a company than is to like integrate it and keep the team and get the multi-year successful outcome out of that company. That is the hard part. And so, if anything I tend to bias my evaluation in that area.

Simon Leopold

So I want to pivot the questions towards a syllabu I’ve been noodling with a bit more is around this idea of power consumption. So there’s been a lot of press lately about how much electricity data centers consume that they’re detrimental to the environment. And I read an interesting article saying, well, but if you’re not getting on a plane and flying, you’re reducing greenhouse gases. And so maybe there’s a good use. And so, I guess with rising costs of electricity, these questions have to be come up. So maybe could you talk a little bit about how you’re thinking about power consumption and the production of greenhouse gas as CO2 in the sort of engineering side and how that’s evolving with your customers and your engineering?

Kip Compton

Sure. So this is a huge focus for us, and it’s been for a while in terms of just – excuse me, our own sustainability goals. And what, I think we published some pretty ambitious and aggressive goals as a company. And part of those sustainability goals is how we reduce not just the greenhouse gases from Cisco’s own operations, but from our customers who are using our equipment. That’s part of our framework as it is for most companies. So this has been an effort for a long time.

In terms of the focus on engineering, last year I actually formed a engineering sustainability office that’s in engineering and works with all our engineering teams as well as the supply chain, as well as our Chief Sustainability Officer for all of Cisco to make sure that this is first and foremost as we’re designing products.

In terms of what we’ve seen in the market, this was important and then it became important and urgent with the rising energy costs and particularly in Europe. And what we’re seeing is that there are multiple places where we can help our customers. Customers are coming to us and one is with our Silicon One technology that is significantly more efficient on a per gigabit basis. Watts per gigabit is a metric in networking. I think we announced deployment with Deutsche Telekom publicly where they said that they reduced their power requirements by 92% on a per gigabit basis. So that’s a pretty significant improvement if you’re looking at a big energy bill.

Another area where we can help customers is with power over Ethernet technology. So this is technology that lets you send power over low voltage wiring. It turns out that this makes the power supplies much more efficient. So we’re seeing a lot of people when they renovate spaces or even build some data centers using this technology. And it improves the power supply efficiency pretty significantly.

The other area is in IoT and I mentioned earlier the sensors and environments. We did a study with Forrester using our Meraki sensors where Forrester saw a 27% energy improvement by using these sensors to trigger close the blind when it’s hot. These are some very basic things, but if you can use sensors to automate them, you can get those savings at scale.

So we see – we talked about – Chuck mentioned on our most latest conference call, we see these energy costs as obviously a potential macroeconomic headwind for everyone. But we also see there being an opportunity for us to help our customers in this area. And we’re seeing some instances of customers actually accelerate investment to get those energy savings.

Simon Leopold

So basically the scenario is a customer has a, let’s say four, five year old campus or data center network consumes more electricity than the newer generation of product. So because of that, they’re refreshing in order to reduce…

Kip Compton

That’s right.

Simon Leopold

The total cost of ownership.

Kip Compton

Maybe they were thinking of refreshing in a couple of years, and now they’re looking at that return and saying, given the energy costs, perhaps I should refresh earlier. And that’s a potential catalyst. Now, on the other side, I mean, realistically there may be customers who decide to delay projects because of energy costs. But we are seeing the energy efficiency for both the sustainability and the current economic reasons as kind of a top of mind topic.

Simon Leopold

And I want to ask about the sort of impact of hybrid multi-cloud on your business. Because it feels to us that eight and 10 years ago, Cisco sort of took the attitude of, I’m not going to sell to those guys, I’m going to just help my enterprise customers. And maybe five years ago, your corporate mind changed and said, you know what, this isn’t going to change. Let’s help the enterprises, embrace multi-cloud, hybrid cloud, we’re a neutral party. So maybe help folks understand a little bit of that history and what you’re doing to help your enterprise customers and their adoption to migration to multi-cloud.

Kip Compton

Sure. So I mean, it’s – cloud for Cisco really impacts our different businesses in different ways. So in the Campus business for instance, a lot of that is about using the cloud to make it easier to manage a campus network. You can’t move your campus switches, your access points to the cloud. You still need them in the building. But we can leverage cloud technologies to just radically simplify and accelerate how people run those networks. And Meraki is a great example of that. And our internet for the future segment, well, that’s where we’re actually helping the webscale is build their clouds with our Silicon One technologies, our Cisco 8,000 product, which is the fastest growing product in the history of the company is really being fueled by that.

On the data center side, it’s kind of what you were referring to which is okay. Most of our customers are going to be in a hybrid state. We’re bringing technologies like the Cisco network control – Cisco Cloud network controller that lets customers design and implement policies and automation and visibility across their on-prem networks as well as their VPCs at Amazon and their networks at Azure and Google Cloud as well. So helping our customers take advantage of multi-cloud for workloads in the same way that we’ve helped them take advantage of on-prem networks.

So you see us with kind of a multifaceted. In terms of the evolution of our attitude here, and I think it took us some time, the webscalers are a different kind of customer. And I think it’s – it took us some time to learn how to sell to them. I think the success we’re seeing now demonstrates that we crack the code and we form the relationships and have very tight engineering – to engineering relationships with the key webscalers and that’s enabled us to achieve that success.

Simon Leopold

Yeah, it’s sort of interesting in that from your disclosures, it works out to be 5% to 6% of revenue from public cloud, which on the surface, oh, well, that’s not a big number, but it’s a big number of a $50 billion revenue company, which would make you the biggest vendor of IT equipment or X servers into that vertical. I think that often goes miss. And so in terms of those partnerships, and from your vantage point of the enterprise, do you see the cloud players as receptive to working with you as a partner? Or do you feel like they’re more competitors?

Kip Compton

No, I don’t see them as competitors. They’re customers and partners. As you said, at this point we’re selling, they’re buying billions of dollars worth of technology from us each year. And I think particularly with what we can bring with our Silicon One technology, our optics and the Cisco 8000 platform, which is actually built on Silicon One is a pretty differentiated value proposition for them in terms of how they can really scale their network and achieve phenomenal economics and power efficiency at the same time. And that’s why you see them adopting their technology.

Simon Leopold

And you mentioned a little bit earlier the effort to extend the Meraki model, let’s not take for granted that everybody knows what that meant.

Kip Compton

Absolutely.

Simon Leopold

Maybe unpack that a little bit in terms of helping us understand the importance of doing that and what it is?

Kip Compton

Sure. So Meraki dashboard is a cloud management tool. So Meraki customers are able to manage their networks by just going to essentially a website in their browser, and they can see their whole network and manage everything from there. And because we’ve got all of that telemetry and all of that configuration information in the cloud, we’re able to provide recommendations, provide more powerful tools and generally make it much easier for our customers. We also on that platform have an incredibly rich set of APIs and a very strong developer ecosystem and partner ecosystem around it, where people are able to build solutions on top of and around the Meraki cloud. And getting all of that – getting essentially the network control plane to the cloud is really key there because developers can access that as opposed to a situation where you’ve got different controllers On-Prem in different enterprises.

So we don’t break out Meraki separately in our results. It’s embedded in things like wireless switching, routing, but it has certainly – it’s certainly been buttressing our market share, and we’ve certainly seen a lot of customers interested in the simplicity that cloud management delivers. And we really think that that cloud management is that the key. I talked about delivering experiences before. We think that’s the key to delivering the simplicity that our customers are looking for. Customers – if customers don’t know what operating system their Meraki products are running, they use the Meraki dashboard, and that’s a full stack dashboard with your full networking stacks, a route, switch, wireless. But now we’ve integrated a bunch of other products. So we have Meraki sensors, we have Meraki cameras, we have cellular gateways. We have systems manager for managing devices all integrated in a dashboard. And as we bring all these products together across different domains of the customer’s infrastructure in one dashboard, that enables us to make it simpler for them as well, because they can implement policies or track usage across these different domains.

Simon Leopold

And how do you think about making that management solution multi-vendor? So if the customer chooses to buy a particular component from somebody that’s not Cisco, which might happen occasionally. Do you integrate that? Do the customers lose any features or capabilities? How do you think about that?

Kip Compton

It’s a great question. I mean, honestly, right now we’re focused on bringing that simplicity across our entire portfolio, and that’s sort of job one. And last summer we announced, okay, what I described with Meraki is great, but Catalyst is the – our largest, frankly, the world’s largest campus portfolio of networking equipment. It’s the most powerful in terms of feature sets and performance, the most powerful campus portfolio in the world. We’re really focused right now on bringing that Meraki simplicity across into our – the rest of our campus portfolio.

And we think that’s the key thing for us to focus on right now. That’s what our customers frankly are asking for more than anything. And that’s something actually we’ve been working on for several years. And we have right now available for our customers cloud monitoring, where they can register their catalyst equipment with the Meraki cloud. They can now go into the Meraki cloud and see all of their catalyst equipment, see the topology, see the status, do troubleshooting. And we’ve actually added that Meraki entitlement into our DNA licenses. So now the people with the DNA licenses associated with the catalyst switches have the option of On-Prem management with DNA center or cloud management with the Meraki cloud.

Simon Leopold

So you might imagine, I talked to some of your competitors on occasion. One of the things that they consistently point out as a challenge for Cisco is the complexity. And so they’ll cite the fact that Cisco has multiple versions of every product, and it’s hard to deal with, and I get it, because if you are a massive company with a full portfolio, their complexity just comes along with that.

Kip Compton

That’s right.

Simon Leopold

And so how do you counter the challenge when your competitors who are maybe more narrow, more point focused, argue that well, Cisco’s complex and we’re [ph] easy?

Kip Compton

Oh, well, I mean, I think, I mean, the breadth of our portfolio, it’s immense and outpaces just about any of our competitors. And we haven’t done as much in the past probably to simplify that as we could. I think you’re going to see us using cloud management to bring that simplicity, frankly, without compromising the breadth or power of our portfolio. I think if you’re a point competitor in one domain, it’s a lot easier to be simple. I mean, they have a simpler portfolio, but what we are seeing and what we’re responding to is customers want simplicity. We’ve seen the growth and the power of that Meraki model. And we think bringing that to the rest of our customer base is the best thing that we can do to address complexity.

Simon Leopold

So as we’re about to run out of time, I always like to close with a question that it’s really meant fairly for – from your vantage point. So not CEO, CFO, but from your vantage point, what do you think is least appreciated by the investment community about Cisco?

Kip Compton

Well, I liked your point about the size of our webscale business. So that’s…

Simon Leopold

Keep publishing that for short.

Kip Compton

Sure. That’s great. I mean, I think the size of our software business, I think we did over $15 billion in software revenue last year. We’re – we’d like to push faster. You joked earlier about how my R&D priorities are software, software and software. We’d like to push, wish faster on that. But we’re at 43% of – since all of our revenues recurring. We’re at a point now where 85% of that software revenue is subscription, only 15% perpetual as we’ve been executing on that transition. So I think I’m – I think that’s an undertold story. At the same time, frankly, we’re not done. We feel a lot of urgency as well as a lot of opportunity to continue driving more software value for our customers and more predictable recurring software revenue for the company.

Simon Leopold

Oh, great. Well, thank you very much, Kip. Appreciate you joining us folks. Thanks for joining us with Cisco at our fireside. My job is to make sure you get to your next meeting on time.

Kip Compton

Thank you.

Simon Leopold

Thank you.

Question-and-Answer Session

Q -

Tue, 06 Dec 2022 03:36:00 -0600 en text/html https://seekingalpha.com/article/4562717-cisco-systems-inc-csco-raymond-james-technology-investors-conference-transcript
Killexams : Cisco shares pop on earnings beat and increased 2023 forecast

A sign bearing the logo for communications and security tech giant Cisco Systems Inc is seen outside one of its offices in San Jose, California, August 11, 2022.

Paresh Dave | Reuters

Cisco reported fiscal first-quarter results on Wednesday that beat analysts' estimates and boosted its guidance for fiscal 2023.

The stock rose about 5% in extended trading.

Here's how the company did:

  • Earnings per share: 86 cents vs. 84 cents expected, according to Refinitiv
  • Revenue: $13.6 billion vs. $13.3 billion expected by analysts, according to Refinitiv

Revenue increased 6% year over year, while net income slid 10% to $2.7 billion. The company now expects sales growth in fiscal 2023 of 4.5% to 6.5%, up from a prior forecast that called for growth of 4% to 6%.

CFO Scott Herren said in a company release that Cisco delivered "strong results" and attributed the company's guidance forecast in part to an "easing supply situation."

While Cisco's numbers topped estimates, the company is still struggling to grow as the technology world rapidly shifts to cloud and subscription software and away from buying physical boxes. Cisco's stock price is down 27% this year, while the Nasdaq has dropped 29%.

Cisco's top business segment, which includes data-center networking switches, delivered $6.68 billion in revenue, up 12% from a year earlier.

Internet for the Future, its second-largest unit, saw revenue drop 5% to $1.3 billion. The division contains routed optical networking hardware the company picked up through its 2021 Acacia Communications acquisition.

Sales in the Collaboration segment, which features Webex, contributed $1.1 billion in revenue, down 2% year over year.

Cisco will hold its quarterly call with investors at 4:30 p.m. ET.

Wed, 16 Nov 2022 07:33:00 -0600 en text/html https://www.cnbc.com/2022/11/16/cisco-csco-earnings-q1-2023.html
Killexams : Cisco Just Demonstrated the Power of Stock Buybacks

Networking-equipment giant Cisco Systems (CSCO -0.22%) reported results this Wednesday, covering the first quarter of fiscal-year 2023. The company generated adjusted earnings of $0.86 per diluted share, surpassing Wall Street's consensus earnings estimate of $0.84 per share.

Investors and analysts applauded Cisco's strong results, and the stock price closed 5% higher on Thursday. However, I don't see a ton of headlines mentioning one of Cisco's most shareholder-friendly qualities: The company is shoveling billions of dollars straight into the pockets of shareholders. I'm particularly impressed by Cisco's effective use of stock buybacks.

Cisco's buybacks make a difference

Fun fact: If not for the anti-dilutive effects of the buyback program, Cisco would barely have satisfied the consensus-earnings target.

Cisco's adjusted net income increased by 2% year over year, landing at $3.5 billion. At the same time, the stock-repurchasing program reduced the share count by 12 million stubs in the first quarter. The canceled stock adds up to 127 million shares on a trailing basis, which works out to a 3% reduction.

In a world where Cisco doesn't worry about share-count reductions, this-quarter's earnings would have landed at $0.84 per share, but only by the skin of its proverbial teeth. With three significant digits, you'd be looking at earnings of $0.856 per share, a rounding error away from missing the analyst target.

OK, that's no surprise

The lower share count shouldn't surprise anyone, especially since the bulk of this-year's buybacks fell in the second quarter of 2022. That period was covered in last-February's earnings update, giving everybody nine months to update their earnings estimates accordingly. The exercise above is just a bit of calculator-based entertainment, illustrating how generous Cisco's buyback program really is.

Cisco has invested an average of $1.1 billion per quarter in stock buybacks over the last three years. Dividend payments averaged $1.6 billion per quarter over the same period. That adds up to $1.69 billion of cash per quarter, sent right back to shareholders in the form of buybacks and dividends. Free cash flows in this time span averaged $3.53 billion per quarter, so the shareholder-bound cash returns consumed 48% of Cisco's average cash profits.

CSCO Stock Buybacks (Quarterly) Chart

CSCO Stock Buybacks (Quarterly) data by YCharts.

Cisco loves to share its cash profits with you, the shareholder

This generous cash return is no accident. Cisco has a history of generating massive cash flow and sharing them freely with stock owners.

On the earnings call, Cisco CFO Scott Herren said that the dividend-payout and buyback activity were "in line with our long-term objective of returning a minimum of 50% of free cash flow annually to our shareholders." That's been an official Cisco policy since the fourth quarter of 2019, three years ago.

I love seeing this shareholder-friendly policy in a veritable cash machine such as Cisco Systems. Even in an off-year like 2022, the company amassed $12.8 billion of trailing free cash flows -- and sent half of it right back to shareholders.

CSCO Free Cash Flow Chart

CSCO Free Cash Flow data by YCharts.

Today, Cisco's stock comes with a shrinking share count and a beefy dividend yield of 3.3%. You should expect the dividend payments to continue rising modestly over the years, while buybacks are adjusted to meet that 50% cash-sharing ambition, year by year. These qualities make Cisco a great buy for income investors, who value a free-flowing stream of cash profits and a tight commitment to cash-based profit sharing.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems. The Motley Fool has a disclosure policy.

Thu, 17 Nov 2022 22:55:00 -0600 Anders Bylund en text/html https://www.fool.com/investing/2022/11/18/cisco-demonstrated-the-power-of-stock-buybacks/
Killexams : What to expect when economic bellwether Cisco reports quarterly results

A man passes under a Cisco logo at the Mobile World Congress in Barcelona, Spain February 25, 2019.

Sergio Perez | Reuters

Club holding Cisco Systems (CSCO) is set to report fiscal first-quarter earnings after the closing bell on Wednesday, and we'll be looking to see how the technology conglomerate has weathered gathering economic headwinds.

Tue, 15 Nov 2022 07:14:00 -0600 en text/html https://www.cnbc.com/2022/11/15/what-to-expect-when-economic-bellwether-cisco-reports-results.html
Killexams : Is Cisco Systems Stock a Buy Now?

Cisco's (CSCO -0.22%) stock price jumped 5% on Thursday, Nov. 17, after the networking hardware and software giant posted its latest earnings report. For the first quarter of fiscal 2023, which ended on Oct. 29, Cisco's revenue rose 6% year over year to $13.63 billion and beat analysts' estimates by $340 million. Its adjusted earnings rose 5% to $0.86 per share, which also cleared the consensus forecast by two cents.

Does that steady growth indicate Cisco's stock is worth buying again after being buffeted by macroeconomic headwinds over the past year? Let's review its previous challenges and its latest progress to decide.

An IT professional checks servers.

Image source: Getty Images.

Why were investors thinking about Cisco?

Last September, Cisco set some promising long-term goals during its investor day presentation. It predicted its revenue and adjusted EPS would both increase at a compound annual growth rate (CAGR) of 5% to 7% between fiscal 2021 and 2025, driven by the expansion of its subscription-based software and cybersecurity businesses.

But over the past year, Cisco's secure and agile networks division (which houses its switches, enterprise routers, and other wireless and access point hardware) struggled with supply chain disruptions, component shortages, and rising freight costs. The growth of that segment -- which generated 46% of its revenue last year -- decelerated throughout all of fiscal 2022 and declined 1% year over year in the fourth quarter. Its collaboration business, which brought in 9% of its revenue last year, also continued to wither as it struggled to keep pace with Zoom Video Communications  and Microsoft Teams.

Those headwinds offset the stable growth of its end-to-end security and optimized applications businesses (16% of its fiscal 2022 revenue) as well the inorganic growth of the internet of the future division (10% of its revenue), which had been driven by its acquisition of Acacia Communications last March. As a result, Cisco's revenue growth flatlined in the third and fourth quarters of fiscal 2022 -- which cast a dark cloud over its ambitious investor day targets.

Why did Cisco's latest report clear away those clouds?

Cisco's first quarter report allayed those fears for three reasons. First, its secure and agile networks revenue rose 12% year over year -- on top of its 10% growth a year ago -- driven by strong sales of its networking hardware and a gradual easing of the supply chain headwinds. Its end-to-end security and optimized applications segments also continued to grow.

Those improvements boosted Cisco's revenue by 6% year over year during the first quarter. It expects that momentum to continue with 4.5%-6.5% growth in both the second quarter and the full year. CFO Scott Herren also reaffirmed the company's investor day goals of achieving 5%-7% revenue and earnings growth over the "long term" during the conference call.

Second, Cisco's margins are stabilizing. Its adjusted gross margin still shrank 150 basis points year over year to 63% in the first quarter -- mainly due to the impact of supply chain headwinds on its product gross margins -- but only declined 30 basis points sequentially. That compares favorably to its sequential drop of 200 basis points in the fourth quarter of 2022. Looking ahead, Cisco expects its adjusted gross margin to finally rise sequentially to 63%-64% in the second quarter. That's a bright green flag that suggests its supply chain headwinds are finally dissipating.

Lastly, that gross margin expansion prompted Cisco to provide upbeat earnings guidance for the rest of fiscal 2023. It expects its adjusted EPS to increase 0%-2% in the second quarter, and to rise 4%-7% for the full year. That's slightly higher than its prior full-year guidance for 4%-6% growth.

Cisco's stock is finally worth buying again

Cisco's stock lost more than a quarter of its value this year as investors fretted over its supply chain challenges and shrinking gross margins. However, its first-quarter report suggests those problems are transitory -- and that it's still well-poised to generate stable growth for the foreseeable future.

At $46 per share, Cisco trades at just 13 times this year's earnings. It also pays an attractive forward dividend yield of 3.3%, which accounts for less than half of its projected EPS for fiscal 2023. By comparison, Cisco's smaller rival Juniper Networks also trades at 13 times forward earnings but pays a lower forward dividend yield of 2.8%.

Cisco certainly isn't a stock for growth-oriented investors. However, investors who are looking for a stable blue-chip tech stalwart that is cheap and generates consistent dividends should consider picking up some shares today. 

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems, Microsoft, and Zoom Video Communications. The Motley Fool has a disclosure policy.

Sat, 19 Nov 2022 22:24:00 -0600 Leo Sun en text/html https://www.fool.com/investing/2022/11/20/is-cisco-systems-stock-a-buy-now/
Killexams : Cisco Stock Gains on Earnings. Layoffs Are Coming.

Cisco Systems shares are trading higher after the networking-infrastructure company posted better-than-expected revenue and profit growth for its fiscal first quarter, ended Oct. 29. The company also raised its guidance for the year.

Cisco CEO Chuck Robbins also disclosed that the company was “right-sizing certain businesses,” reducing head count in some areas. Cisco Chief Financial Officer Scott Herren said in an interview that the cuts could affect up to 5% of the workforce. Cisco had 83,300 employees as of the end of July. Despite the planned cuts, Cisco expects to end the current fiscal year with head count about flat with the start of the year.

Wed, 16 Nov 2022 10:01:00 -0600 en-US text/html https://www.barrons.com/articles/cisco-earnings-stock-price-51668548274
Killexams : NCCU, Cisco Systems partner with 'Hybrid Learning' to increase access for students on and off campus

Before the COVID-19 pandemic, the NC Central campus buzzed with activity and classrooms were full. "I’d say things have changed alot," said NC Central senior Maurice McKellar, who spent much of his college experience in a virtual learning mode.

He remembers how schools and universities had to quickly adapt to learning online with hopes of returning to the classic classroom model. Now, McKellar prefers both models.

He said, "It definitely gave us like a lot of opportunities to change the way we do things and still get an education."

"The world has changed and hybrid work is going to be the way of the future," says Scott McGregor, with Cisco Systems, an IT and networking company. They have partnered with NC Central as the school has embrace that hybrid model.

Cisco’s Webex app allows people to meet with anyone, anywhere and in real time. "The video and audio capabilities of our technology makes it easy for that student to really feel like they are much more present than it was in the past," said McGregor.

It wasn’t as smooth of a transition for other "sister institutions" according to NCCU’s chief information officer, Leah Kraus. She said, "Because we had prepared with a strong infrastructure, a strong network infrastructure and a strong partnership with CISCO, we were able to really pivot."

Jessica Ganao, chair of NCCU’s Department of Criminal Justice says the new Hybrid-Learning model meets the needs of many of her students who work other jobs. "Where our students will come into the classroom physically, come through Webex or we will record the sessions and allow them to view them after the class has taken place for that day.

School leaders say on-campus learning will always be an important part of the college experience for most students and faculty, however, now they have more options.

"I’ve been calling it moving from hybrid school or hybrid learning. We are really hybrid-living. I don’t really see us going backwards," said Kraus.

NC Central leaders say the flexibility of the hybrid-learning approach will make classes more accessible to students who may not be able to participate on campus.

Mon, 21 Nov 2022 06:28:00 -0600 en text/html https://www.wral.com/nccu-and-cisco-systems-partner-with-hybrid-learning-to-increase-access-for-students-on-and-off-campus/20590579/
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