New Cisco boss plots more M&A and disposals
Article by by Doug Woodburn at CRN
Orginally posted at: https://www.channelweb.co.uk/crn-uk/news/2421878/new-cisco-boss-plots-more-m-a-and-disposals
More acquisitions of the mould of Meraki and SourceFire desirable as Cisco looks to get more focused, says Chuck Robbins
Cisco’s new CEO said acquisitions and divestitures will be a key tenet of his strategy as the first quarterly results of his tenure beat expectations.
In Cisco’s final quarter ending 25 July, revenues rose four per cent year on year to $12.8bn (£8.2bn), with full-year 2015 sales also rising four per cent to $49.2bn.
GAAP net income rose by 3.2 per cent to $2.3bn in Q4 and by 14.4 per cent to $9bn for the full year, meaning both the top and bottom line topped the Wall Street consensus.
One of the core pillars of Robbins’ strategy is “accelerating what’s working and changing what’s not”, in line with Cisco’s recent decision to divest a product-focused chunk of its service provider video business.
Recent acquisitions such as Sourcefire and Meraki – where Cisco has been able to accelerate the acquired firm’s revenues by taking it to its own sales force and customer base – are the way forward, Robbins indicated.
He said in Q4 Cisco added Sourcefire customers 15 times faster than at the time it acquired the intrusion prevention vendor in 2013.
“Three years ago we bought Meraki for $1.2bn, with $100m of annual orders,” he added on a Q4 conference call, a transcript of which can be found here. “We closed this year with almost a $1bn order run rate, scaling the business through our global commercial channels. These are just a few examples of what we are capable of when we focus, and this is what I intend to accelerate.”
On the back of Meraki, Cisco’s wireless business grew seven per cent in Q4, although its core businesses in switching and routing also grew two per cent and three per cent respectively, driven partly by the traction of new platforms. Security grew four per cent.
By geography, the Americas grew seven per cent and both EMEA and APJC fell one per cent, with emerging markets down two per cent.
Robbins, who is in just his third week as the official CEO, concluded: “These strong results show what we are capable of when we’re focused, and you can expect us to continue to drive the evolution of our portfolio to maximise the value we bring to customers in today’s rapidly changing market. The network’s strategic role at the centre of everything becoming digital – today and in the future – is why I strongly believe Cisco’s best years are ahead of us.”