John Chamber, The chief Executive officer of Cisco Systems, affirmed the company’s long term revenue growth of 5% to 7% as he focused on expanding the software and services segment to lessening on depending on routers and switches.
The story of Cisco Struggle:
Cisco Systems, is struggling with the cut throat competition of its rivals such as Juniper Networks, Hewlett-Packard Company, And Arista Networks Inc in the field of making computer network equipments. Now the company is looking for new market which it predict can be earned by the acquisition of software and services companies. For this the company has to increase its recurring sales and profit margins.
Services contributed a bigger portion of the company’s revenue, having 25% of sales. In the last fiscal year it earned 21% of Cisco Systems’S $46.1 billion revenue. And the company still wants to double the amount generated from its software revenue.
Citrix Systems, a business partner of Cisco announced a 4.1% , biggest intraday rise in the month.
Citrix Systems, which makes visualization software, is a future acquisition target for Cisco Systems. As NetApp, the data storage specialist and ServiceNow Inc, the information technology management software maker.
On 18th Nov, Cisco Systems, Inc. (NASDAQ: CSCO) committed to pay $1.2 billion for the acquisition of Meraki inc., the maker of tools for internet Wi-Fi networks and security. And paid about $5 billion on accruing NDS Group Ltd, the maker of cable setup boxes.
Both the companies help Cisco Systems, Inc. (NASDAQ: CSCO) in making its network smarter in the way of detecting fraud and protecting video content and giving the corporate world a better configurable system.
As the company is coming into consumer technology it backfired. The market shares declined and profit margins reduced to break-even. Chamber, in order to manage the situation has eliminated 7,800 jobs and closed the business of the Flip video camera unit.
The projected sales of the company will grow by 6% for the year 2013, 2014 and 2015. Cisco Systems, Inc. (NASDAQ: CSCO) cuts its long term revenue growth target to 5 to 7%, from the earlier projection of 12 to 17%.