When you're a vendor of Cisco's size, you get to be a bellwether whether you like the title or not. Reports from other vendors over the last few weeks haven't inspired the market with confidence, and thus many eyes were on Cisco to determine whether or not to panic. The answer was no. All is well at least so far as Cisco's fiscal Q3 earnings report can tell us. and should continue to be so at least into next quarter.
Revenues checked in at $12.0B while non-GAAP earnings per share were $0.57, both of which were slightly but measurably ahead of expectations. For next quarter, the company is expecting non-GAAP earnings of $0.59-0.61 with revenue up between 0-3% over the same quarter last year. Both numbers were also ahead of expectations, led by demand for security services and geographically by the Asia-Pacific region.
Cisco's raw numbers are of course dependent on its networking gear and related products, but its growth prospects come from the software and services side. Hence, they have to play both offense and defense simultaneously, and it's an easy job to mess up with plenty of competitors ready to step into the void.
But the fear in the market this quarter was not of competitive pressures but rather of some sort of broader tech spending malaise. Perhaps that fear will recede into the background for another 2-3 months.