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Cisco's third quarter was a similar story to its fiscal second quarter: notable declines in switching, public sector and other areas where Cisco has been weakening in the past year, and gains in collaboration, data center and services.
Cisco's core switching and routing business, which together account for a little less than half of Cisco's overall revenue, continue to struggle. Routing saw a 7 percent increase year-over-year, but switching declined 9 percent.
Asked by analysts about weakness in switching, Chambers admitted that CIsco will continue to see a number of competitors from "a lot of different directions," including, he said, "HP and Huawei on price." Chambers also reiterated that the switching market is in significant transition and that price-per-port is falling, creating short-term pressure on revenues.
Public sector is another area where, according to Chambers, Cisco must "adjust quickly." Public sector accounts for about 20 percent of Cisco's overall business, but while the segment was on a 30 percent growth rate four quarters ago, Cisco saw a decline of 8 percent in orders, year-over-year, for Q3.
There were myriad bright spots. Collaboration, which includes Cisco's videoconferencing portfolio, grew 39 percent year-over-year, and data center virtualization and cloud grew 31 percent. Cisco's Unified Computing System (UCS), which has been a hit for Cisco since debuting more than two years ago, now boasts 5,400 customers following a gain of 1,570 customers in the third quarter, and now has an annualized run rate of $900 million, Chambers said.
Total global enterprise sales grew 12 percent year-over-year, and commercial sales, which is what Cisco calls midmarket and small business, grew 2 percent. Cisco's services business, which accounts for 20 percent of total revenue, grew 14 percent overall.
As for the changes to its structure of boards and councils -- put in place by Chambers about five years ago -- Cisco has reduced its number of councils from nine to three, and its boards from 42 to 15. Neither Chambers nor Moore committed that Cisco would exit the board and council structure entirely.
"The headline is we've changed the way we're operating," said Moore, who said the rearranged corporate structure will drive "simplicity and agility into the organization."
Chambers called out members of his team for a job well done and trumpeted several areas of growth for Cisco, but overall his choice was to highlight areas where Cisco needs to improve rather than where it has thrived.
Said Chambers in his closing comments: "The buck stops here. It's my responsibility. I get it."
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