Page 5 of 6
The Cisco Response
Cisco itself declined repeated requests by CRN to interview Goodwin, Pond or another channel or operations executive for this story. In a statement e-mailed to CRN in mid-July, Goodwin offered the following:
“We realize that dealing with the lead time issue these past several months has not been easy for our partners. As mentioned during our last quarterly conference call, as a result of several actions we have taken, we have seen significant lead-time improvement with many affected product families,” Goodwin said.
“Together with our partners we are addressing four major market transitions -- collaboration, video, virtualization and cloud,” he added. “Each of these transitions by themselves is a huge transformation, but together these market transitions create an opportunity unlike any other I have seen in my more than 30 years in the IT industry. We realize that product availability and lead-time predictability are critical components to capturing this massive opportunity and thus are committed to continuing to improve upon our lead times so that together we can redefine the Internet.”
A Cisco spokesman reiterated that lead times were impacted by two factors. One was increased demand and the other was supplier constraint caused by a range of factors, including labor and semiconductor capacity issues as well as industry consolidation.
“In any rapidly shifting supply/demand environment such as the one we have experienced this past year, shifts in lead times, inventory levels and manufacturing outputs will occur,” the spokesman wrote to CRN.
“We remain confident in our suppliers’ ability to replenish and rebuild their inventory levels to meet customer demand moving forward. We continue to work closely with our suppliers to strive to ensure our value chain operates effectively and we are able to meet customer demands and requirements. We have made great progress, and expect to continue to make progress in the months ahead.”
One sign that things are getting better is Cisco’s impressive switching revenue for its third fiscal quarter ended May 1. Cisco, in fact, said switching sales were up a whopping 40 percent from the year-ago period to $3.7 billion. Not only that, Cisco’s earnings for the quarter were up 63 percent to $2.19 billion compared with $1.35 billion in the year-ago quarter. Sales for the quarter were up 27 percent to $10.4 billion compared with $8.2 billion in the year-ago quarter.
Chambers called the quarter “one of the best we have seen in the history of our company.”