Cisco Systems, Inc. (CSCO): Staying Ahead

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Cisco Systems, Inc.From its start in 1984, Cisco Systems, Inc. (NASDAQ:CSCO) was a leader in network services and provided the latest technology to businesses of all sizes throughout the world. As those businesses have chosen to upload their valuable data to cloud-based servers, however, the face of networking has been changing. And Cisco Systems, Inc. (NASDAQ:CSCO) is evolving with it.

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.


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