Cisco’s stock briefly hit a multi-year high yesterday in after hours trading, thanks to the killer quarter it announced.
Shares reached $24.24 and are still up 12% so far, at about $23.78. The last time Cisco’s shares crested $23 was in November 2010.
Cisco announced its quarerly earnings yesterday. For the quarter, it hit $12.22 billion in revenues. Analysts expected $12.17 billion. Earnings per share hit 51 cents, versus expectations of 49 cents.
Cisco had nine straight quarters of record revenues and six quarters where earnings grew faster than revenues, CEO John Chambers said.
It’s secret sauce? Cisco is no longer just a network company, he told analysts during a conference call on Wednesday. Cisco is now an “IT company.” By that mean he means that enterprises buy a lot more stuff from Cisco than just routers and switches.
That’s becoming more true. Cisco has diversified into software, security, servers, and other data centre tech.
One of the brightest spots is Cisco’s server business. First launched in 2009, its Unified Computing System product line is on track to be have become a $5.5 billion business, growing 35% year over year, Chambers said.
That’s roughly 10% of Cisco’s ~$50 billion in revenue. A year ago, Cisco announced that it had reached 10,000 customers for UCS.
The road to diversity has been long and hard for Cisco.
Chambers had tried to grow a consumer business. But one attempt after another failed from the Flip camera shuttered in 2011, to the death of its home videoconferencing product UMI last year, to the sale of its Linksys wireless router unit in January.
But the need to diversify has never been greater and Cisco’s work is far from done. It’s router and switch business still accounts for about 2/3 of the company’s revenue and that bread-and-butter networking business is under attack from a new technology called software-defined networking. SDN which promises faster, more flexible networks that cost less.