Partners Are Bullish Even With Cisco Job Cuts


Solution providers Wednesday said they are bullish about Cisco's prospects even in the wake of a planned 5 percent cut in the networking market leader's workforce.

Cisco surprised investors Wednesday after announcing it planned on eliminating 4,000 jobs due to weaker-than-forecasted sales growth of 3-5 percent for the current quarter ended Oct. 31.

Cisco partners, for their part, said they see strong sales ahead for their Cisco networking and unified communications products and services.

[Related: Cisco To Shed 4,000 Jobs, Shares Plummet
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Steven Reese, chief technology officer at Sigmanet, No. 154 on the SP500 with $128 million in annual sales, said his company's Cisco sales for the current fiscal year ended July 27 were up 67 percent and "our forecasts and our pipelines are bigger than they have ever been right now.

“With companies like Cisco, you have to look at the relative vs. the absolute," said Reese. "You look at an announcement that they are laying off approximately 4,000 people, but you also have to look at how many companies Cisco has acquired in the past 12 months. So, does it worry me? No. I guess the devil is always in the details, so we need to see where the cuts get made, which they haven’t announced yet. But the reality of it is, you have to expect a certain level of attrition when a company acquires like Cisco acquires.”

Harry Zarek, CEO of Compugen, No. 58 on the SP500 with $443 million in annual sales, said Compugen's Cisco business is going to be up in the "high single digits with some segments like the server market way up from a relatively small base. Server and security are two very strong Cisco growth areas for us. They have done a lot of acquisitions. Maybe this consolidation is being driven from integrating acquisitions."

Zarek said he remains confident in Cisco CEO John Chambers' ability to transform Cisco into the No. 1 IT company. "I have total confidence in Cisco," he said. "If there is anyone that can do it, it is Chambers. I can't think of any tech CEO more actively involved in the business with a deep understanding of where the marketplace is going. He does a great job of looking around the corner to see what is coming. There is nothing that I have seen that gives me any reason to be concerned at all. We have seen nothing that would indicate weakness or lack of investment. This is absolutely a company we continue to bet on."

Zarek said he is particularly excited about Cisco's $2.7 billion acquisition last month of network security vendor Sourcefire. "We are looking at bringing it into our portfolio even though the deal is not closed yet," he said. "We are trying to identify how we can participate with Sourcefire and use that to drive additional revenue."

Mont Phelps, the CEO of NWN Corp., No 88 on the SP500 with $266 million in annual sales, said NWN's Cisco business will be up considerably this year. "They are our No. 1 partner," said Phelps, who has made a big bet on Cisco's hosted VoIP offering. "I am not worried at all. It used to be nobody ever got fired for buying IBM. Now it's Cisco. They have dominant market share and the dominant position in the market. They have met challengers toe to toe and continue to win."

Phelps said he has seen Cisco rebalance its workforce time and time again with no impact on its channel partnerships or investments. "What I have seen from Cisco is a continued willingness to rely on their channel partners to work with them to drive their products into the marketplace," he said. "Reducing their headcount quite possibly means they are looking for us to continue to expand and work with them to drive more sales into the market."

Phelps said adjusting headcount is a fact of life for vendors in the fast-paced IT market. "In the world we live in, you need to constantly adjust to run a great business," he said. "Sticking where you are isn't always the right answer. Everybody would like to see continued headcount growth, but the real world isn't always like that."

PUBLISHED AUG. 14, 2013