The work is paying off. Cisco’s third quarter earnings were better than analysts expected, with the company bringing in a $2.7 billion profit and a total of $12.2 billion in sales. This is an increase of five percent over the same quarter last year, proving that the company’s efforts to stay one step ahead when it comes to fulfilling businesses’ needs are paying off.
Rival stall
Cisco Systems, Inc. (NASDAQ:CSCO)’s smart moves are especially apparent when compared to rival International Business Machines Corp. (NYSE:IBM) and its recent losses. IBM’s net income was down 1.1 percent in its most recent quarter, with revenue decreasing five percent from the same period in 2012. The company’s CEO referenced poor sales team performance as the reason for the loss, but she also mentioned the company’s failure to transform quickly enough in a company-wide video memo.
“Where we haven’t transformed rapidly enough, we struggled,” Virginia Rometty told the company’s 443,000 employees. “We have to step up with that and deal with that, and that is on all levels.”
Cisco Systems, Inc. (NASDAQ:CSCO) rival Juniper Networks, Inc. (NYSE:JNPR) is also having troubles. In its Apr. 23 earnings call, the company reported a 3% increase over 2012 earnings in the first quarter to $1.6 billion. Shortly after the earnings call, however, shares dropped 6.3% due to negative expectations for the second quarter.
Juniper Networks, Inc. (NYSE:JNPR), a provider of routers and other networking equipment, is suffering from a shift in enterprise-related spending. Analysts also reported a decline in on-site equipment spending from telecommunications companies. Investors have been concerned about tech stocks in recent months as business spending continues to shift toward cloud-based technologies.
A shift to the cloud
Cisco Systems, Inc. (NASDAQ:CSCO), International Business Machines Corp. (NYSE:IBM), and Juniper Networks, Inc. (NYSE:JNPR) are all working hard to adapt to rapid changes in technology. The business world is adapting to cloud-based server technology as reliance on mobile devices increases. In short, businesses want to be able to access their files from anywhere. They also want to take away the headaches associated with maintaining an on-site server room. By turning the work over to a big dog like Cisco, these businesses can leave the I.T. work to those who do it best, paying only a monthly fee for the privilege.
More than eight in ten companies are currently using some form of cloud technology, according to a study by CompTIA. The study also found that more than half of the businesses participating in the study planned to increase their investment in cloud technology by at least 10% within a year. Cisco, International Business Machines Corp. (NYSE:IBM), and Juniper Networks all provide cloud services to businesses, offering attractive service suites to businesses of all sizes.
Staying ahead
As the war for business dollars wages on, all three of these companies will have to stay on top of technology to win customers over. As always, customers will choose the company they use based on reputation, price, and available offerings. All three companies are deploying technologies designed to compete in the shifting marketplace. With Cisco Systems, Inc. (NASDAQ:CSCO)’s willingness to adapt and its prevalence in earnings, investors may have more confidence in that tech company than its competition.
The article Cisco’s Success Goes to the Clouds originally appeared on Fool.com and is written by Stephanie Faris.
Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of International Business Machines. Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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