Networking giant Cisco Systems Inc. is looking for slight revenue growth next quarter, which would be the first such advance since November 2019, but some of its core equipment businesses are still suffering from the pandemic.
Tuesday, Cisco CSCO,
reported slightly better-than-expected second-quarter tax benefits as it sees a “gradual improvement” in order growth in commercial, public sector and service provider businesses, which account for about three-quarters parts of your product orders. But he also said corporate-business remained smooth, due to long sales cycles and pauses in business spending during the pandemic.
Among the areas hardest hit by the pandemic, total revenue per product was $ 8.6 billion, down 1% and network infrastructure platforms fell 3%.
The company’s WebEx video conferencing business once again showed double-digit growth as companies continue to use it for group video meetings while employees work from home.
While remote work is an advantage for Cisco video conferencing software, it is causing delays in some network upgrade projects on corporate campuses. Cisco CEO Chuck Robbins said employees who will eventually return to the office will help with sales of infrastructure, such as its switching and routing products, and its software-based network service, called CAT 9000.
“I really think it’s going to be hybrid, where people will work from home and everyone lands here, where they’ll work from home three days a week and work from the office two days a week and vice versa,” Robbins said. “The question is what accommodations do customers entail, based on employees’ concern about space issues, concern about future pandemics or other concerns. That’s what we don’t know yet. “
He added that now some customers are also starting to upgrade to the next generation of WiFi, called WiFi 6.
The future of a hybrid workplace will likely fuel that demand for WiFi 6, Robbins said. Many workers will continue to videoconference at meetings that take place in the office, demanding even more on corporate networks.
Cisco said it expects third-quarter fiscal revenue to grow from 3.5% to 5.5% year-on-year. The company’s guidelines include the fact that the third quarter will have an additional week, noted Cisco’s new chief financial officer Scott Herren, who took over from Kelly Kramer.
Investors clearly expected more from Cisco, as they reduced their shares as the call progressed, with their shares nearly 5% in off-hours trading. It seems likely that major network upgrades or upgrades will continue to occur slowly, as needed, as long as most corporate U.S. continues to work from home.