Network giant Cisco Systems Inc. is looking for slight sales growth for next quarter, which would be the first such progress since November 2019, but some of its core equipment businesses are still suffering from the pandemic.
On Tuesday, Cisco CSCO,
reported slightly better-than-expected fiscal results for the second quarter as it sees a “gradual improvement” in order growth in the commercial, public sector and services businesses, which account for nearly three-quarters of its product orders. But it also said business activities remained weak due to long sales cycles and disruptions in corporate spending during the pandemic.
Of the areas most affected by the pandemic, total product revenue was $ 8.6 billion, down 1%, and network infrastructure platforms down 3%.
The company’s WebEx video conferencing business once again showed double-digit revenue growth as companies continue to use it for group video meetings while employees work from home.
While remote work is a boon to Cisco’s video conferencing software, it is causing delays in some network upgrade projects on corporate campuses. Cisco CEO Chuck Robbins said employees who eventually return to the office will help sell infrastructure, such as the switching and routing products, and the software-based network service called CAT 9000.
“I really believe it will be hybrid, where people will work from home and everyone will land here, where they work from home three days a week and work from the office two days a week and vice versa. Versa,” Robbins said. is what accommodation that leads to for customers, based on employee concerns about space issues, concerns about future pandemics or other concerns. We just don’t know yet. ”
He added that some customers are now also starting to upgrade to the next generation of WiFi, called WiFi 6.
The future of a hybrid workplace is also likely to fuel that demand for Wi-Fi 6, Robbins said. Many employees will still video conference to meetings that take place in the office, adding even more demands on corporate networks.
Cisco said it expects revenue in the fiscal third quarter to grow 3.5% to 5.5% year over year. The company’s guidelines include the fact that the third quarter will have an extra week, noted Cisco’s new Chief Financial Officer Scott Herren, who has taken over the job from Kelly Kramer.
Investors were clearly hoping for more from Cisco as they pushed their stocks down as the call went on, with a nearly 5% share of after-hours trading. It appears that major network expansions or upgrades are likely to continue to be slow, if needed, as long as most of corporate America is still working from home.