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Cisco sales fall as traditional product sales slump

Cisco's traditional product sales such as switches are falling, but revenues in emerging products in areas such as security are on the up

Cisco’s traditional networking equipment sales slumped by 10% in the company’s second quarter of 2017, which contributed to an overall decline in sales of 2% compared to the same period a year ago.

Cisco sold $11.6bn worth of products and services in the quarter, compared with $11.8bn in the same period last year.

Sales of routing, switching and datacentre products, which make up Cisco’s traditional business, decreased by 10%, 5% and 4% respectively, while security product sales increased by 14%, collaboration by 4% and wireless product sales rose by 3%. Overall product sales were down by 4% to $17.7bn, and service sales increased by 5% to reach $6.1bn.

This follows a fall in the first quarter, when sales fell by 2.6% compared with the same period the previous year, with sales of switches dropped by 7%. Cisco CEO Chuck Robbins said customers were holding back investments: “We saw a fair number of customers around the world put the brakes on spending.”

While customers do not appear to have unleashed their spending yet, Robbins claimed there were positive signs.

He said the company was happy with its sales of security, automation and intelligence products on networks and into the cloud. This kind of differentiation from its core routing and switching business will continue.

“This quarter, we announced our intent to acquire AppDynamics, which, combined with Cisco’s networking analytics, will provide customers with unprecedented insights into business performance,” said Robbins.

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“We will remain focused on accelerating innovation across our portfolio as we continue to deliver value to customers and shareholders,” he said.

Cisco’s chief financial officer, Kelly Kramer, said progress had been made in the company’s transformation to making money from software and recurring revenues from a reliance on product sales, adding that the company saw further growth in key business areas of collaboration, security and services.

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