Cisco service provider orders down 12% in second quarter

Cisco blames a rapidly evolving market for a dip in sales during the second quarter of its financial year

Cisco has revealed that product orders through service providers dropped by 12% during the second quarter of its fiscal 2014, contributing to a significant fall in overall sales at the networking bellwether.

Speaking on an analyst conference call, Cisco CEO John Chambers revealed that while the bulk of this fall came courtesy of a 20% collapse in video orders and specifically, set-top boxes, “product transitions and core routing, along with emerging markets weakness, also negatively impacted service provider results.”

Said Chambers: “At the end of last year, we introduced new switching and routing platforms which typically ramp up over four to eight quarters. Our next-generation routing business saw year-over-year revenue decline of 11% with orders down 5%.”

“Switching revenue declined 12% year-over-year with orders down 6%, as we saw some deals delayed as customers architect and qualified their new application-centric infrastructure systems,” he added.

Cisco’s total sales fell by 7.8% year-on-year to $11.2bn, while net income plummeted by 54.5% compared to the year-ago quarter, down to $1.4bn. Cisco’s EPS contracted by a similar amount to just $0.27.

Bright spots included a tripling of the booking pipeline for its new Nexus 9000 hardware, 10% growth in datacentre revenues, growing marketshare on Unified Compute, and close to 100% growth at its cloud networking platform, Meraki. Security sales also grew, with network security up 21% and content security up 5%. Services sales were also up, by 3%.

Geographically, Chambers pointed to a slowing decline in Erope, down 2%, with Northern Europe and the UK showing good momentum while Southern Europe remained fragile.

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