By Steven Burke, CRN, November 11, 2011, 1600 hrs
John Chambers, Chairman and CEO, Cisco has said the networking leader is doing a good job getting tougher with competitors, including some that are providing "free" networks to customers.
"We are just beating our competition," said Chambers in a conference call with analysts after Cisco posted better than expected results for its first fiscal quarter. "We are more aggressive on the competition. We are going to be tough on our competitors whether it is Juniper or HP or Huawei or Avaya."
The get tough stance comes with Cisco facing what Chambers called some "pretty aggressive measures including some companies offering networks for free to our customers and we are handling that pretty well." Chambers did not single out who was offering the free networking products, but he did say the competitor waging the fiercest price offensive is Huawei.
"You are seeing some aggressive acts, maybe even some acts of desperation by some people to try to get orders," he said. "We have seen complete offers for a network given away."
The comments came after Cisco posted net income of $1.8 billion on a five percent increase in sales to $11.3 billion for its first fiscal quarter ended October 29. That compares in the year ago quarter with net income of $1.9 billion on sales of $10.75 billion. Both sales and net income were above the earlier guidance provided by Cisco.
Furthermore, the results were also above Wall Street consensus of 39 cents per share on sales of $11.03 billion, according to Thomson Reuters. Cisco shares were up 47 cents or nearly three percent in after hours trading to $18.07.
The strong quarterly results marked a rebound for the industry bellweather which has undergone a massive restructuring with $1 billion in expense reduction slated for this fiscal year. That has included a headcount reduction of 9,140 positions from one year ago to 63,465 employees as part of a plan to streamline decision making with a new lean and mean Cisco.
Chambers said the strong quarterly results are a sign of the $40-billion company's ability to "turn quickly and move forward and not emerge weaker but much stronger." What's more, he said, Cisco is getting better at making decisions quicker.
Chambers said in the long run he sees Huawei as the company's toughest competitor. "Huawei will always compete on price," he said.
Cisco plans to battle Huawei head on in the China market, said Chambers. "You can't let them make the profits in China and then do a break even around the rest of the world," he said. |