The computer networking company avoided any big downgrades from Wall Street analysts after reporting a four percent decline for its fiscal fourth quarter revenue and serving up a weak financial forecast.
Most analysts think Cisco’s business will not improve in the next few quarters, but do expect to see change in the long run. And both said they see Cisco’s pivot toward software and subscription revenues — and away from its long-held hardware approach — as a major indication of its future success.
Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, said that there currently is a pause due to some new switching products where enterprises are waiting for the new products.
Then there is the strategic shift where the majority of their business becomes the newer, ‘cloud-native’ products. This complete transformation could take one to two years, Moorhead said. Security, the internet of things, and intent-based networking are the best bets for the company moving forward, he said.
Cisco’s revenues for products were down five percent in the fourth quarter, while services were up a percent. Security was up three percent, while wireless offerings were up five percent. Every other revenue source was in decline, including routing and switching, which both were down nine percent year-over-year.
Cisco’s product revamp, the Network Intuitive was announced in June but is still being rolled out. The new system applies machine learning to traditional networking. Cisco claims the new network can “recognise intent, mitigate threats, and learn over time.” It’s the first major overhaul Cisco has made to its products in 15 years.