Cisco FY 4Q16 Earnings Call Notes

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Cisco Systems’ (CSCO) CEO Chuck Robbins on Q4 2016 Results

Strong performance in security, data center

“We had strong performance in security; data center switching, collaboration and services as well as continued success in the transition of our business model to software and subscriptions. ”

What we’re focused on

“We’re focused on a tighter coupling of security into the core. We’re focused on policy and orchestration and cloud-based management across the entire portfolio. So there is a significant amount of innovation the teams are working on there over the next several quarters as well”

Weakness in Service provider and emerging countries will likely continue

“Yes. I’ll give a couple of macro comments here. So we obviously are calling out the weakness we saw from a demand perspective in Q4 relative to SP and emerging countries. We also — obviously as we look forward, we just — we’re uncertain how to model any improvement in those two in particular going forward. And the other issue is that there is some impact from the transition in our business model. ”

Did see customers pause on Brexit

“What we saw from a Brexit perspective is exactly what you would expect. In the U.K. proper, we saw customers pause. We saw them just kind of slow a bit because they’re uncertain. And we also saw the impact of the currency devaluation which you would expect. But we remain very committed there. We think we’ll work through this. But those are the real impacts.”

Trends in routing

“when I think about routing, I actually think about it in several different ways. Number one, you got SP traditional portfolio with edge access and core, which we discussed earlier which is largely just a consumption driven cycle that we go through. In the enterprise space, we have this transition to software defined wide area networking, which we are very well positioning right now with our IWAN portfolio and we are actually working on — a key differentiator for us which I think is — as our teams have built out the ability to really drive the next generation secure edge with our cloud security capabilities, the combination of dynamically provisioning those branch solutions with the ability to have robust cloud security and edge security is going to be a real differentiator for us.”

Kelly Kramer

Double digit declines in service provider capex

Yes, James. You’re correct in that. Over 50% of our routing business comes from service providers. So there’s a direct correlation there. And I think if you look at the discussions that have taken place with our peers, you look at some of the analyst reports on SP CapEx, we actually saw exactly what the analysts have talked about. I saw one report that discussed double-digit declines outside of the United States and maybe flat to slightly up inside the U.S., which is effectively what we saw from a demand perspective