Cisco Systems’ (CSCO) Q4 2017 Earnings

Charles Robbins – CEO

Cyber attacks have increased

“the 90% increase in cyber-attacks against IoT devices over the last year”

Currency headwinds in the UK

“On the UK, if you go back to Q3, we talked about it being significantly down and one of the primary drivers was the headwind created by currency. In Q4, what I’ll tell you is that headwind from currency remained, it did not ease up….I’ll say one final thing on the UK: while enterprise and commercial we saw a good uptick, service provider remained about the same.”

Orders improving

“In general, I think if you just look at our order rates that we released today, we went from Q3 negative four to flat in Q4. So clear that we saw improvement there.”

Kelly Kramer – EVP & CFO

Inventory is up

“A large majority of the inventory increase is driven by memory advanced purchases. So that protects us in for a large portion but we also have been as I mentioned in the lack — we’ve also been securing and committing to our purchase commitments for even more access to supply that also will ensure that we have the supply albeit perhaps at higher prices if they continue to rise.”

 

 

Cisco at Bank of America Conference Notes

David Ulevitch – SVP and GM, Security Business

Security is a top priority

” would start out with the market, which is that security remains our customers’ number one priority. So, it’s not the kind of topic that shows up in the board room once a year for an update, it’s on the permanent agenda of every major company around the world and I think that customers are looking for to figure out, who can help them really actually make sense of the IT landscape that they are now operating in.”

The IT landscape has changed dramatically over the last 25 years

“That IT landscape is dramatically different than the one we’ve had over the last 25 years, right. So people work outside the office. They’re using all kinds of devices, often times their own devices. They are using cloud services. They are adopting public pods. So, the IT surface is dramatically different and they need help securing that ”

2020 is not that far off

“I used to say by 2020. But then I go — I realized people don’t know when 2020 is, they think that’s like way off from the future. So now you say again three years ”

Customers are demanding consolidation of endpoint agents

“So, today the endpoint market is super interesting because it’s a barbell distribution. You have Symantec, McAfee and Trend Micro, they own more than half the market in the endpoint, after that, it’s a total cats and dogs, nobody has more than any — like a couple — maybe a couple low-single digits in market share and there’s nobody that has a meaningful position there, and yet we see the amount of spend happening in the endpoint increasing. We have customers that are demanding consolidation of endpoint agents.”

AWS is incredible

“So I think that Amazon, first of all AWS is incredible, we use AWS at Cisco, we use a bunch of the other cloud offerings as well. And what you’ll find is they built an incredible sort of APIs, for customers to take advantage of, but that also creates to our complexity and in fact that’s not necessarily their core competence. So they’re still looking. That’s what I talked about with the firewall, even though the Amazon provide APIs to drive essentially security policies, the glue is in the tools to enable us at a very complicated and they’re just primitives and they’re world class primitives, but they’re just the primitives.”

Cisco Systems’ (CSCO) Q3 201

Charles Robbins – CEO and Director

Cyber crime can have devastating effects

“Last week’s WannaCry ransomware attack was another example of the devastating impact cybercrime can inflict on individuals, companies and countries around the world. Since Friday’s attack, our Talos cyber threat intelligence team has been working around-the-clock to dissect the WannaCry ransomware, understand its attack patterns and keep our customers protected. It’s important that the tech industry and customers work together to defend against these attacks from cyber criminals.”

What´s driving areas of weakness

“I’m just going to tell you what drove the weakness in these areas so you can assume the other pieces of the business were pretty much as expected. In the Americas, it was primarily the U.S. federal — I mean, there’s so much uncertainty around budgets. The U.S. federal business was a significant driver. Mexico, there has been a lot of uncertainty in Mexico and that was actually down 49% for us year-over-year. So it was — there’s a great deal of uncertainty around the investment landscape there. And then the third element would have been the Service Provider business in the Americas. So those were the things that really drove the orders in the U.S. In Europe, the U.K., the currency issue in the U.K. is real and was very impactful in that business. And then we continue to see pressure in the Middle East relative to oil prices.”

Subcriptions and software business is growing

“We set out 18 months ago to transition the business to one of more software and subscription. At the time, 8 quarters ago, it was $2 billion on our balance sheet. Today, we’ve more than doubled that, up 57% this quarter to $4.4 billion and accelerating.”

Kelly Kramer – CFO and EVP

Price is within range

“when we look at the drivers of our growth margin, price in Q3 actually has been in the same range that it was pretty much last year as well as last quarter in terms of the price index that we’re seeing. So that’s in the same range. Again, it’s high, but it’s in the range. It’s not increasing. I would say in terms of the guidance for Q4, we’re assuming that. We’re also making sure the teams are being very aggressive where they need to be aggressive in areas and then against competitors where we need to be. But overall, the pricing hasn’t changed dramatically besides the normal erosion that we see in churned business lines.”

Cisco Systems’ (CSCO) Q1 2017 Earnings Call

Chuck Robbins – CEO

On the US elections

“Post-election I think that, most CEOs that I talk to we are pragmatic about the result and now we are all focused on the policy issues that matter to each of our companies…I think that President-elect Trump appears to be very business oriented and is very focused on driving the US economy and anytime the US economy improves, that’s certainly good for us”

Macro Uncertainty leading to CapEx weaknesses for service providers

“Right now I think there are unique set of characteristics particularly in SP [Service Provider] space you have the overarching macro uncertainty in the economy which I think has led to the SP CapEx weakness has been reported all year by the analyst as well as you have the political and regulatory environments. They are somewhat uncertain both in the US and around the world. ”

Kelly Kramer – EVP & CFO

If the optimism of the last week is sustained, it will be a boon to them

“I’d say for campus switching which is two-thirds roughly of our entire switching business which is our biggest business unit. I’d say most of that is macro, right. I mean it is the one area and I think we’ve talked about this before, it’s one area that people can put off doing a refresh, if there is any macro concerns and that’s what we typically see anytime you see any economic pause or macro event. So I do truly feel that if the optimism we’ve seen this week in the stock market continues giving that feeling of optimism in the economy I would expect that to raise all boats in our campus switching side.”

Steve Milunovich – Analyst from UBS Securities

“…we just wrapped up our tech conference and we had a panel on folks who helped companies moved to the cloud and the general consensus was that private cloud implementations generally are not working and many companies that begin on a private cloud path end up going down a public cloud path.”

Cisco FY 4Q16 Earnings Call Notes

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

Cisco (CSCO) CEO Chuck Robbins Interview

Cisco (CSCO) CEO Chuck Robbins on adapting to change given the shift to the many transitions going on in the enterprise IT landscape by focusing on the customer

“I think there are so many transitions going on that you have to look at them through the lens of opportunity that they provide for you.  You can’t be in denial because I’ve told our team that denial is the first step to death.  You have to look at these transitions and understand the implications of what matters to the customer.  You can’t get so locked up on the technology itself that you lose focus on what type of problem the customer is trying to solve.  The customer is not trying to get cloud, they’re not trying to get software defined network but rather they are trying to solve business issues that they’re trying to get at.  We’re going to remain agnostic on the technology, whatever our customers need, we’re going to do.”

 

 

SourceL July 18, 2016 Video Interview, http://www.bloomberg.com/news/videos/2016-07-18/cisco-ceo-on-growth-expectations-china

Miscellaneous Earnings Call Notes 2.11.16

Ingersoll-Rand Plc (IR) Michael W. Lamach on Q4 2015 Results

It was a year of volatility

“2015, it was a year that I can characterize best by one word and that word is volatility; volatility in energy markets, in foreign exchange rates, in industrial markets, in emerging markets and, of course, in the stock market.”

North American HVAC positive while global industrial markets weak

“North American Commercial HVAC and Residential HVAC as well as transport and Commercial HVAC markets in Europe are generally positive while global industrial markets remain weak. Transport markets in the Americas will be flat to down as lower trailer volumes will be largely offset by higher auxiliary power units, small truck refrigeration and other products.’

Douglas Emmett’s (DEI) CEO Jordan Kaplan on Q4 2015 Results

We are not seeing what’s going on in the stock market affect the underlying fundamentals of our operating properties

“That’s a great question and believe me, we are watching for it. But the answer is no. I mean, it’s funny if you turned off, if you didn’t turned off the stock market; and you go these are great days around here. I mean, other than watching what’s gone off the stock market in all areas tenant demand, tenant attitude deal flow, we have movement in the economics of leases, rental rates etcetera up, up and up all good. So you kind of see what’s going off the stock market and you wonder whether the stock market is vibrating to some different type of thing that’s going on out there, it’s just hard to know, but no we are not. What we are seeing in the stock market, we are not seeing in any of our underlying fundamentals of operating our properties.”

Our office space is leveraged to media not energy or banks or technology

“we’ve got a very, very diversified tenant base. And so, when you look at sectors that might be potentially backing up in the economy be it energy or banks or technology there is no overweight to anyone of those particular sectors within our market and thus far the media companies which is the tech has been fuelling our media companies the Hulu’s and Netflix etcetera that our production companies are very, very busy providing content and that flows through to the caterers and the accountants and the other people within our portfolio.”

Cisco Systems (CSCO) Charles H. Robbins on Q2 2016 Results

Starting in the third week of January, we saw people pause a bit

“what I will tell you is that after week 10 through those three weeks, we saw customers as they were trying to just digest what was going on, they just paused a bit. And you see customers say I want to just wait and see what’s going on. Let me take a look at this, we want to understand this a little better.

General Cable (BGC) Michael T. McDonnell on Q4 2015

Utility seems to be bouncing back

“The last three months we saw some pullback related, I think to end-of-year. I think a lot of fourth quarter was related to end-of-year tightening of the supply chain, reduction of inventories, and so forth but we’re pretty encouraged by what we’re seeing right now in utility sort of bouncing back a bit and getting back into line with where it had been in the last year maybe even a bit more in North America. ‘

Miscellaneous Earnings Call Notes 12.11.15

Universal Health Services (UHS) Presents at Bank of America Merrill Lynch 2015 Leveraged Finance Brokers Conference

Steve Filton

Behavioral health business is more recession resistant

“if you’re seeking — and you’re seeking acute care treatment, you need a hip implant or you need some sort of ENT surgery et cetera, you may think about the economics of that; you may choose to postpone that because you don’t want to come out of pocket for a co-pay or deductable or because you don’t want to be out of work frankly during a tough economic climate. But if you try to commit suicide or you overdose on drugs and alcohol, you are not going to be in a position to decide whether you should or shouldn’t be admitted to the hospital. That decision is really being made generally by somebody else who is effectively economically insensitive to what your economics of the situation or concerns might be. So, I think that’s another reason why the behavioral business has generally proved to be more, I’ll call it, recession resistant.”

Optimum occupancy in behavioral care is in the low to mid 70s

“occupancy rates and our behavioral facility peaks in the mid 80s, right around 84% in about 2005-2006. What we started to do at that point because we have a view probably the ideal occupancy rate in this business is somewhere in the low to mid 70s. And so, when we were at 85% in about 10 years ago, we’re turning away a lot of patients at that point because obviously if we’re averaging 85%, it means that there’s a lot of days when we’re at 90 and 95 and even a 100% occupancy. It also means that because of some of the constraints that we have, we have put male and female patients; we don’t put adults and children together, we don’t certain diagnoses together. So, as a consequence, it’s difficult for facilities to really run at something close to full occupancy.”


Silicon Laboratories Presents at Credit Suisse Technology, Media & Telecom Conference

Tyson Tuttle

Low power for IoT requires innovation

“if you look at the energy efficiency that’s required. If you’re handset only has 10% battery life left, and I know that when mind says 10% battery life, I’m like looking for a charger. But if you imagine that amount of power needs to power an IoT device for five years. So that’s essentially the amount of energy that’s in the little coin cell and they want that device to sense the environment. Let’s say every few minutes it needs to communicate that when something happens. This type of energy consumption requires a lot of innovation. And if so this is what we are focused on doing.”

From a macro perspective, wireless markets suffering but infrastructure business doing well

“I think a lot of people that we are selling into wireless were suffering, especially in China, we were not exposed to that at least on our infrastructure business, we had a little bit of exposure on the microcontroller side and some of the optical modules that did hold back our growth in IoT in the second half. But on infrastructure we see that it’s pretty solid globally. And this is more of a reflection of core network in data center roll outs.”


Barnes & Noble’s (BKS) CEO Ronald Boire on Q2 2016 Results

Have seen increased traffic so far in Q3

“the challenges were greater than anticipated and reduced traffic as well as conversion. During the second quarter, we implemented a significant number of website fixes to increase traffic, improve the overall user experience and stabilize the site. So far during Q3, we have seen increased traffic and have stabilized the site for the holiday season. We plan to implement additional improvements after the holiday season to further upgrade the overall user experience.”


The Cooper Companies’ (COO) CEO Bob Weiss on Q4 2015 Results

Had a bumpy ride from mid September through the end of November

“August was a good month and things dropped off in October a lot, particularly in the U.S. and some of the problems we ran into in Europe exacerbated the most. We thought we’re in pretty good shape in early September, found out we weren’t in as good shape as we thought by mid-September and had a bumpy ride with our integration if you will in Europe, from mid September until pretty much the end of November. Having said that, we had what we call a very respectable November”


Toronto-Dominion Bank’s (TD) CEO Bharat Masrani On Q4 2015 Results

Mark Chauvin

Are starting to see stress in consumer credit portfolios in energy-impacted provinces, but within expectations

“Next, with respect to our oil and gas exposure, we were not surprised by the level of impaired loan formations this quarter. Ongoing analysis indicates that the oil and gas nonretail credit portfolio continues to perform within expectations, given the current level in near-term outlook for commodity prices in this sector. We are beginning to see signs of deterioration in the oil impacted provinces consumer credit portfolios, which again are well within our earlier expectations. Based on ongoing stress tests conducted against the credit portfolios, I remain comfortable that the potential impact of low energy prices on the bank’s credit losses remains well within the range of a 5% to 10% increase over 2015 levels.”

Seeing a gradual increase in delinquency rates over last 4-5 months in oil impacted provinces

“we have been watching it very closely, especially the impacted provinces, which would be Alberta, Saskatchewan and Newfoundland. And what we are seeing in two categories, being the indirect auto but the non-prime segment primarily and then in the card segment, we have seen a gradual increase in delinquency rates over the last four or five months.”

Customers affected are early indicator, the type of customer that would be more challenged than the typical customer

“So in many respects we look at that as an early indicator because that would be the customer that maybe would be more challenged than the typical customer. Now, I would stress that these two categories are less than 1% of our total book and that we expected to see losses of this level.”


Sprint’s (S) Management Presents at Bank of America Merrill Lynch Leveraged Finance Brokers Conference

Tarek Robbiati — CFO

Wireless data is much cheaper in some other markets than the US

” I think the – look at the U.S. wireless market, it’s the biggest one in the world by value. And the reason why it is the biggest one in the world by value is because we have 300 million people and you have a very, very high ARPU…when you really look at some of their – the size of their bills, it’s quite extraordinary. I mean you compare this with Hong Kong which is a market that I am very familiar with. In Hong Kong you can get very, very decent data packages on 4G networks for less than $5 postpaid, which is quite extraordinary.”


Comcast’s (CMCSA) Management Presents at UBS Global Media and Communications Conference

Mike Cavanagh–CFO

No new comments on wireless plans. We believe the cheapest way to transmit data is to get it to the hardwire as soon as possible

“we have no news on this topic today. What we have decided is that it’s certainly worth at this point triggering the MVNOs that we can work on exploring what kind of offering we could bring and go deeper to learn and experiment. That’s the state of play on the MVNO. And that sits in the context of having been big believers in WiFi. So, you have seen us invest in and continue to invest in the WiFi as an extension of the value of the broadband pipe, which is still the kind of best and cheapest way to transmit data we believe is to get it to the hardwire as soon as possible. So, with the progress we have made on our WiFi product and broadband, we think it makes complete sense to be exploring on – what possibilities the MVNO offering has to add value to our customer relationships. That’s as much as we know. There is no – it will take time to draw any conclusions from what we are now going through.”


Vail Resorts’ (MTN) CEO Robert Katz on Q1 2016 Results

Our labor markets are tight

“think ensuring that we have enough, ensuring that we are providing the right employee experience, attracting enough of the right labor, retaining labor and then a part of that is obviously being able to have housing for everyone that works here, I think it is probably our number one concern right now in terms of ensuring that we can continue to drive success. And so, I mean that’s led us over the last couple of years to continue to invest to make sure that we can do that. I’d say where we feel right now is that our markets are tight. We think it is a challenge.’

Upper income US remained strong

“Colorado in particular is the strong market, continues to be a strong market given the economy here, Utah, the Bay Area and California so that obviously is the big help right there but then I would say we are seeing pretty broad based strength from all of our major destinations across the United States, I would say even places like Los Angeles, like Seattle which are not typically our strongest markets in terms of size, we’re seeing real strength there too”…

“I would say right now I think the domestic, the U.S. economy on the domestic side is very strong, the upper income portion of that remained strong ‘


AutoZone’s (AZO) CEO Bill Rhodes on Q1 2016 Results

DIY auto spending has benefitted from lower gas prices

“I think clearly we are seeing some industry strength currently. I think a part of that has to do with what’s going on with gas prices. And while gas prices initially went down, you didn’t see the initial correlation with miles driven increasing. But in more recent months, starting really strong in this summer, and continuing through September, the latest date that we have available, it’s showing nice strength. Over long periods of time we’ve seen that has a nice correlation with our DIY industry growth.”


Cisco Systems (CSCO) Presents at Barclays Global Technology Brokers Conference

Hilton Romanski

Customers are looking for a hybrid cloud

“what we’re hearing from customers fundamentally is that they want to see the benefits and the economics of public cloud in their private cloud environment. So that would suggest to us that ultimately there is a hybrid cloud solution out there for enterprises where some of those benefits across multiple types of workloads across their own environments that are private as well as those that are being hosted in a public cloud is going to co-exist.”


Dave & Buster’s (PLAY) CEO Steve King on Q3 2015 Results

Couldn’t be happier with how 2015 is shaping up

“we couldn’t be happier in terms of how 2015 is shaping up, while we’ve achieved so far as we look forward to a strong finish in the fourth quarter.”


Halliburton’s (HAL) Management Presents at Wells Fargo 2015 Energy Symposium Brokers Conference

Christian Garcia — Interim CFO

North America looks like it could be marginally better than expected, but international looks marginally worse

“North America does look like it’s going to be marginally better than what we said in the third quarter call and international looks like it’s marginally worse and in total, we’re in line with our expectations as we left the third quarter.”

2016 is clearly going to be another down year but we don’t know the magnitude yet

“2016 is still opaque. E&P the E&Ps have not announced their budgets, but clearly it’s going to be another down year. The question is the magnitude of the decline.”

Argentina had elections that could lead to positive economic reforms

“Argentina just had elections and we think that new president elect will usher in a new era of economic reforms achieved among that would be probably a potential depreciation of their over valid currency which will in the short term provide some little need to some dislocations but I think in the long term would be actually help that economy boot that economy and would invite for investors.'”


HCA’s Management Presents at Opperheimer 26th Annual Healthcare Broker Conference

Bill Rutherford, Chief Financial Officer

Seeing higher turnover of nurses as demand for nurses strong

“We think you know we are seeing higher turnover of recently than we’ve historically had. And we think there is a lot of other supply in the marketplace and demand for nurses. We’ve got a host of efforts around recruiting. We talked about on our call our efforts to hire nurse graduates and putting them in orientation and onboarding them a little bit differently so that they have — the retention is longer for those new nurses.”

See continued strong economies in the majority of our markets

“We see continued strong economies in the majority of our markets and I think that provides really fundamental momentum for the company and those trends don’t appear quickly, nor do they disappear quickly. So, we are optimistic that our market trends, we are seeing has some durability to it in the future.”


Comerica’s (CMA) CEO Ralph Babb on Goldman Sachs U.S. Financial Services Brokers Conference

Energy reserves at 3% of total energy related loans

“if prices remain low for longer, we expect to see continued negative credit migration and losses to emerge yet we believe they will be manageable. We have increased our reserves for energy loans in each of the past four quarters, as a result of an increase in criticized loans and sustained low energy prices. Because investors have been particularly interested in the size of our energy reserve allocation note that at the end of the third quarter, we had reserves amounting to more than 3% of our total energy and energy related loans.”


U.S. Bancorp (USB) Presents at Goldman Sachs US Financial Services Brokers Conference

CFO, Kathy Rogers

Planning for three interest rate increases in the next 12 months including next week

“as we look out into 2016, I do think that we are seeing an economic environment that is somewhat similar to what we saw this year, may be slightly improved. As we think about the interest environment, we are projecting in our plan, a potential for two interest rate hikes next year, and then December 1 of this year; so a total of three if you look out over the course of the next 12 months.”

Not seeing any deterioration of credit outside of energy

“the simple answer is no. We’re really not. Outside of energy, it’s really relatively benign, no significant change.”

We’ve probably gotten to a point where reserves will start building again (but not necessarily because of credit deterioration)

“I think one of the things that you’re going to see is that we are getting to that point in the cycle where many banks, including ourselves, have enjoyed a nice outcome of reserve releases. And I do think we’re coming to the end of the cycle. And I think that you’ll start to see reserves starting to build as we move out into later quarters.”


Lululemon Athletica’s (LULU) Laurent Potdevin on Q3 2015 Results

Start of Q4 has been mixed

“In line with macroeconomic trends, the start of Q4 has been mixed. We saw lower traffic in the final weeks of Q3 and into the first couple of weeks of Q4, with steady improvement in Thanksgiving. Given the current environment, we’re taking a conservative stance with revenue in Q4, while taking the necessary actions to manage inventory and control expenses.”


Moody (MCO) Barclays Global Technology, Media and Telecommunications Conference

Mark Almeida, who is the Head of the Moody’s Analytics Business

November was a good month from an issuance standpoint and December has gotten off to a strong start as well

“November was a good month from an issuance standpoint, and December has gotten off to a pretty good start as well. So I think things have firmed up a bit, since some of the weakness that we saw in the summer time.”


Korn-Ferry’s (KFY) CEO Gary Burnison on Q2 2016 Results

Even in a digital world, it still pays to have people housed in the same location

“I think that creating connectivity of people and clients in an environment of collaboration is incredibly important and although we live in a virtual world, I fundamentally believe that the people need, to the extent possible, need to be housed in the same location.”

Gregg Kvochak

“global demand for our Executive Recruitment services remained strong in the second quarter.”


McGraw-Hill Companies’ (MHFI) CEO Doug Peterson Presents at Goldman Sachs U.S. Financial Services Conference

Issuance is down 30% year to date

“we’ve seen a choppier market, issuance is down during the quarter and year to date overall issuance is down globally about 28% and in the quarter its down again over 30%, 35%, 37%, depending on which element of the markets that you look at. So we’ve seen some volatility in the ratings business.”


Avnet (AVT) Presents at Raymond James Technology & Communications Investors Brokers Conference

Kevin Moriarty, CFO

Our product is service

“Avnet’s product is, our product is service, has been and always will be. Models change the way we get compensated for that service. We need to continue to be nimble and agile to be able to move with that”

We feel pretty good about the environment

“I would characterize the current lead times as stable, short. We haven’t really seen any significant changes in push outs, cancelation rates. So we feel pretty good. EM, we continue to experience growth within our European business. I would characterize the Americas as sluggish overall on the component side.”


ConocoPhillips’s (COP) CEO Ryan Lance on 2016 Capital Budget and Operating Plan

We see dividend as highest priority

“Despite the tough market, our dividend remains the highest priority use of our cash. We view the dividend level as a long-term decision. And we’ve been in the current low price cycle for relatively short period of time”

Capital budget down ~25% from last year, -54% from 2014

“We’re announcing a 2016 capital budget of $7.7 billion that’s $2.5 billion lower than 2015 capital guidance and more than $9 billion lower versus 2014. In setting our budget, we’re flexing capital down appropriately for the price environment without losing opportunities or sacrificing the safety or integrity of our operations.”

Cisco FY 4Q15 Earnings Call Notes

New CEO

“It’s an honor today to lead this call as the CEO of Cisco. While this is only my third week officially in the CEO role, we’ve really hit the ground running since my appointment was announced on May 4”

11B in FCF

“For the full year, we generated strong operating cash flows of $12.6 billion and free cash flow of $11.3 billion. We returned $8.3 billion to our shareholders through share buybacks and dividends, which represented 73% of our free cash flow.”

Switching benefitting from customers connecting everything

“We continue see strength based on, frankly, customers connecting everything, IoE, collaboration. As we continue to drive our collaboration portfolio, all of those video end units require switching ports. Security is driving an element of that, as is the transition we see in wireless.”

[analyst comment] Doesn’t seem to be too impressed with switching performance

“I want to go back to the question on switching because I’m trying to understand. This is a major upgrade, and still we don’t see the numbers picking up materially. The sequential growth we’re seeing is below what we’ve seen the last two years, and I’m wondering. Can you go over what’s offsetting the growth in Nexus 3000 and Nexus 9000? Why are the numbers not showing much greater increase given the magnitude of the cycle?”

Strength in commercial is because shifted selling morion to align with business issues. Commercial customers tend to be early adopters

“I think the key is that we have really shifted both our solutions and our technology as well as our selling motion and our services capability to be much more tightly aligned with how the technology aligns to our customers’ business issues. And I think we’re doing that very well in the enterprise, and I think the teams have done a really good job of that in commercial. And those commercial customers, those midrange customers, we see it time and time again. They tend to be the early adopters of our new technology because they view it as a way to accelerate their business, to drive their competitiveness, and they just always seem to adopt early.”

Chinese performance actually the best in 8 quarters

“if you look at the emerging markets, I would tell you that story in Q4 was quite similar to the story in Q3. If we go through the five BRICM countries, Brazil actually was negative 45%. Russia was negative 38%. China was negative 3%, which actually was the best performance we’ve had in eight quarters. And we had some bright spots. India was plus 5%. Mexico was plus 26%, and Mexico had just a tremendous year in general.”

“I think that largely they’re largely macro and geopolitical issues. We have adjusted our cost structure where needed and we’ve invested in areas where we’ve seen growth, as you would expect. “

Cisco FY 3Q15 Earnings Call Notes

Bye Bye John Chambers

“As I reflect back, I’m extremely honored and proud to have led Cisco for the last 20-plus years. We set out to change the way the world works, lives, learns, and plays. And while many thought this was a very ambitious and not unobtainable goal, we absolutely have achieved that goal. We have delivered incredible innovation and have disrupted markets and at times ourselves. We have seen many competitors come and go. We’ve had our setbacks but always come back even stronger, something almost no other technology company has done. We have remained incredibly focused on delivering for our shareholders. We are a cash and profit machine and have maintained our margins over time by delivering sustainable differentiation through integrated architectures based on intelligent networks.”

Challenges remain in service provider and emerging markets

“The volatility in service provider and emerging markets we have discussed in prior quarters continues. Our service provider business remains challenged both globally and in the U.S.’

Verizon testing Cisco’s next gen systems

“During the quarter, Verizon announced it is moving to a next-generation 100-gig Metro network in the U.S. and that it will test and deploy Cisco networking convergence systems, the NCS. No one thought we were even in this game. Our ability to win the deal was entirely driven by our new generation in terms of engineering organization, our ability to deliver integrated architectures, our agility with engineering to realign resources quickly, the speed of our innovation, and our unique ability to partner with our customer to shape their future and the future of the industry.”

Cisco and Microsoft partnering

“During the quarter we announced Cisco and Microsoft will integrate Cisco cloud innovations with Microsoft Azure to help service providers more quickly and cost efficiently launch new applications. We will also extend the enterprise-class security and services and customer private clouds to Microsoft Azure with Cisco Cloud Services Router, the 1000V”

We saw the internet early on and then the internet of things

“In our 1997 Annual Report, when it was not obvious that the Internet would take off, we boldly declared that an Internet revolution would alter the fortune of companies, countries, and people, and we saw it come to life. A number of years ago we started talking about the next phase of the Internet, the Internet of Everything. That will be much bigger than the last, and it will require everything to become digital. At the time, almost no one understood what we saw. Today, it’s everyone’s idea. The conversations we are having today with our customers are so similar in many ways to those that we had 20 years ago. We have always been the example and saw the transitions early. And when others start noticing them, they are well underway.”

The Verizon deal was important because we won in an area that we’ve not historically been strong

“When you win a Verizon deal, people didn’t get what that was. That was optical in an area that we’ve traditionally not been strong in. Because we organized our sales engine different, our service engines different, and our R&D engine different, we understood what the customer wanted. We understood on the fly how we’d realign resources. We understood how you’re going to have a win rate that is much higher than ever before in markets that we haven’t traditionally been as strong. So all those, Simona, translate into revenue growth and profit growth.”

There are 10 major players in data centers

“If you look at where we are, and let’s call it the massively scalable data centers, the top 10, our role in that is evolving, and candidly we’re starting to move much faster. If you watch our ability to bring new products to market, you’re going to see us have all 10 of the major players as key customers shortly. And up to recently, as you know, we were missing largely in one of those.”

Security is a fragmented market

“security is the ideal market for us. It basically is made up of hundreds of fragmented players. We’re the largest volume player at only 7.5% of the market. And you know our view, we don’t enter markets where we don’t have a good chance of getting to 40% market share with sustainable differentiation.’

We can do with 20 people what used to take thousands

“what excites me the most is what we’ve done on culture and how we’ve built an engine platform innovation. And if you watch the innovation we’re talking about in many of these areas, what used to take thousands of people, Pankaj does with 20. We do the new mobility capability with data combining Wi-Fi with 3G and 4G in a way with 18 people in eight months. You make moves in security the same way. You bring Spark to life with business messaging with 200 people. We can now rival the best startups there are in the world and out execute them because they can build off of that capability.”