Market Overview

Cisco To Report Q3 Earnings: What's In Store?


Cisco Systems Inc. (NASDAQ: CSCO) is scheduled to report third-quarter fiscal 2018 earnings on May 16. The company outpaced the Zacks Consensus Estimate for earnings in three of the trailing four quarters, while matching the estimate once. This resulted in an average positive surprise of 2.98%.

Let's discuss the factors likely to influence third-quarter results.

Collaborations to Boost Digitization

Cisco collaborated with UAE-based telecom company `du` and signed a MoU with the Government of Portugal to accelerate digitization.

The company teamed up with Teradata TDC to leverage on IoT with a view to digitally transforms cities. Integration of Cisco's Kinetic IoT data platform with Teradata Analytics Platform enhances support for public safety and will aid in creating smart city framework. The company also

Notably, at the Mobile World Congress ("MWC") 2018, Cisco partnered with government and telecoms, like Reliance Jio, Telenor, SFR (a subsidiary of Altice), Airtel, TIM, Vodafone and Saudi Telecom Company to digitize and build advanced and 5G capable networks.

At MWC, Cisco announced plan to form a multi-vendor ecosystem to accelerate adoption and viability of Open vRAN solutions. The company announced 5G Now portfolio to aid global service providers and consequently mobile operator customers worldwide by advancing their 5G plans.

We can conclude that during the quarter, Cisco innovatively capitalized on digitization opportunities. The new collaborations are likely to boost top-line growth in the to-be-reported quarter.

Adoption of Expanding Networking Portfolio

During the quarter, Cisco was selected by NBC Olympics as a provider of IP video and networking solution for the XXIII Olympic Winter Games.

In order to simplify network architecture, Cisco collaborated with Verizon to accelerate adoption of Hybrid Information-Centric Networking ("ICN").

Cisco introduced its new Cisco Crosswork Network Automation software portfolio, which will improve the efficiency of its large-scale networks. The company unveiled NCS 1004 and NCS 1010 modular platforms to aid providers leverage their fiber investment by enhancing automation capabilities.

The company also introduced Cisco SD-WAN vAnalytics and Cisco Meraki Insight to bring visibility to wide-area network ("WAN").The new products are likely to strengthen the company's networking capabilities.

Focus on Enhancing Cloud Offerings

During the quarter, Cisco announced enhancement of its HyperFlex platform with the 3.0 software release allowing for dynamic deployment and management capabilities of its cloud services.

Container Platform, a new production-grade software for the management of Containerized applications across the cloud environment, was also introduced.

We expect Cisco to deliver robust performance in the Cloud services segment. The completion of Broadsoft's acquisition during the quarter is likely to strengthen Cisco's cloud strategy portfolio, helping it to achieve a leadership position in the segment.

Significant Developments in Security Segment

Cisco's efforts on expanding footprint in the rapidly-growing security market bode well. During the quarter, the company collaborated with Rackspace to deliver its customers protection against evolving sophisticated threats such that their multicloud journey is secured. The company also collaborated with the likes of Apple, Aon and Allianz to introduce a new cyber risk management solution for businesses.

In the last quarter, Cisco reported 38% deferred revenue growth for the segment driven by solid demand for unified threat, advanced threat and web security solutions. The Zacks Consensus Estimate for the Security segment revenues is pegged at $578 million, representing year-over-year growth of 9.7%.

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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