Cisco Video Revenues Surge 30%

NDS Acquisition Leads the Way in Q3 5/16/2013 7:40 AM Eastern

Cisco’s $5 billion acquisition of NDS paid dividends in the vendor’s third quarter as service provider video revenues hit $1.29 billion, up 30% year-over-year, and represented a 10.6% slice of Cisco’s revenue pie.

The quarterly surge was “driven largely by NDS,” Cisco chairman and CEO said on Wednesday’s earnings call. He said the integration of NDS, a company that specializes in video software, security, and product integration services, “continues to go well.”

Chambers said Videoscape Unity is getting additional traction, noting that two new European companies, including GET of Norway, signed on for Cisco’s managed multiscreen platform for MSOs and other service providers. Liberty Media and Cox Communications are among other majors that are using Videoscape. Cisco announced in January that it had completed the integration of NDS's multiscreen components into Videoscape Unity. It closed its acquisition of NDS in July 2012. 

The “service provider [segment] was very strong,” Chambers said. “You’re seeing our relevance to the large players, the AT&Ts, the Verizons, the Time Warners, the Comcasts continue to be very solid and really make a difference, so I like the trends in the U.S. “

By comparison, Arris, which just wrapped up its acquisition of Motorola Home, announced Wednesday night that it expects a weaker-than-expected second quarter, but anticipates revenues to pick up in the second half of 2013. Company chairman and CEO Bob Stanzione said “distractions” created by the M&A activity surrounding Motorola Home caused the division to lose sales momentum while also while some customers hesitated on signing on new business until the final fate of Motorola Home was known.  

The next big growth category for Cisco in the quarter was wireless, which brought in $523 million, up 27% versus the year-ago quarter.

With everything factored in, Cisco beat Wall Street estimates by posting third quarter net income of $2.7 billion on revenues of $12.2 billion, versus net income of $2.6 billion and revenues of $11.6 billion in the year-ago quarter. It’s anticipating fourth quarter revenues of $12.2 billion to $12.5 billion.

Cisco's results on Wednesday paved the way for big gains today. Cisco shares rose $2.66 (12.54%) to $23.87 each in mid-day trading Thursday.

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