Cisco CEO Robbins On 'Severe' Competition, WannaCry Attack, Political Uncertainty And More
Robbins On The Record
"The competition that we faced has been severe," said Robbins.
Cisco is predicting a year-over-year revenue decline of between four to six percent for its current fiscal quarter, largely due to drops in its service provider and public sector businesses, specifically in the US federal government.
"Our second quarter ended during the [US Presidential] inauguration, and this administration has been very clear about the fact that they want more efficiency in the government. They want to actually lower some cost in some areas and increase them in other areas, and many of the agencies and organizations just don’t have clarity yet … You got all these uncertainties. So I think that all of that will become clearer as we move forward, but to me, the fundamental things that we're pushing in our business are still valid," Robbins said to CNBC.
Robbins On Huawei
"The competition that we faced has been severe. It's not like Huawei appeared last week, these guys have been around for a long time. We know how to compete with them. We've competed with them in emerging countries for a long time, and we continue to evolve our strategy and I think that we're in a position – they do a good job, don't get me wrong – but I do believe we're in a good position to compete with them," said Robbins.
WannaCry Global Ransomware Attack
"Customers are going to leverage next generation technology that you're going to see us deliver over the coming quarters. Much like what we saw with the security [WannaCry] issue over the weekend, customers are going to need deep automation, greater analytics, and insights from their infrastructure, and they're going to need security embedded in the network," Robbins said.
Additionally, during Cisco's earnings call on Wednesday Robbins said, "Last week's WannaCry ransomware attack was another example of the devastating impact cybercrime can inflict on individuals, companies and countries around the world. Since Friday's attack, our Talos Cyberthreat Intelligence Team has been working around-the-clock to dissect the WannaCry ransomware, understand its attack patterns and keep our customers protected."
Weak Q4 Guidance & Roadmap Ahead
"We talked last quarter about the fact that our Service Provider business in emerging countries had been challenged, that continued and actually got a little worse. We also saw a significant slowdown in U.S. public sector, particularly the federal business – which is a pretty significant business for us – due to the uncertainty of budgets. Then as this transition to software and subscription continues, we put $500 million on our balance sheet last quarter in software and subscription business. So the fundamental strategy of moving to software and subscription, we've doubled that amount of revenue that is sitting on our balance sheet since I took the [CEO] job … As customers build out these next generation networks that are going to accommodate billions and billions of new devices, things like integrated security in the network are going to be critical, and that's what we're going to deliver for them."
Federal Government Sales Declines
"The federal government [sales decline], in my view, is simply a byproduct of uncertainty around budgets. It's a byproduct of uncertainly around what does IT modernization and the federal government look like, and how long is it going to take, and what should we as agencies be doing around that. And when that becomes clear, we'll be a very clear part of that strategy. So I'm not concerned about that long-term at all," said Robbins.
80 Percent Software Focused
"If you look at the overarching business, 80 percent of our engineers and 80 percent of our R&D expense is actually in software. So the differentiation in many of our products is around our software capability," Robbins said.
Importance Of Service Providers
"The service providers around the world are actually not only good customers, but they're also very strategic routes to market for us. When you look at some of these countries and some of the data sovereignty issues, we believe it's going to be real important for us to deliver our (Software as a Service) and our cloud offers in those countries through our service providers. So we believe they're going to remain strategic partners for us. One of the biggest benefits that we provide for them is helping them create solutions that they take to the enterprise customers … We're going to remain focused on this side of the business [and] make sure that we obviously run that business efficiently," Robbins said.