Technology

Cisco Cable Sales Pop

5/14/2012 12:01 AM Eastern

Cisco Systems sees a software-only future
for TV down the road — but today, it’s still reaping healthy
revenue growth from set-tops.

The company’s cable-centric Service Provider Video
group posted revenue of $1 billion
for the three months ended
April 28, up 12% year over
year. But Cisco shares fell last
week on an overall weak outlook
for the current quarter.

Cisco is in the midst of a $5
billion proposed takeover of
NDS Group, a worldwide provider
of TV security and middleware
technologies. The
deal, announced in March, is
expected to close in the second half of 2012, pending regulatory
approvals.

The NDS deal will “significantly increase the speed
with which we can help our service providers and a
broader set of media players deploy and monetize nextgeneration
video experiences,” Cisco chairman and CEO
John Chambers said on the company’s earnings call.

Chambers said he has spoken personally to more than
20 service-provider customers about the NDS acquisition
and claimed “every one of them
understands the importance of
this move and the benefits it
gives to them.”

Last year, as part of its goal
to chop $1 billion in annual operating
costs, Cisco sold its settop-
box manufacturing facility
in Juarez, Mexico, to electronics
maker Foxconn Technology
Group.

As video infrastructure increasingly
migrates “into the cloud … over time [that]
will help our margins as we move out of a set-top box approach
with software to a cloud approach,” Chambers
said. “That will take many years to evolve. The Videoscape
type of activity has to be there to manage that segment
of the video.”

Videoscape is Cisco’s umbrella strategy to merge traditional
TV with next-generation Internet video content
and applications.

The lift in Service Provider Video sales in the recent
quarter comes more than a year after Cisco experienced
a pronounced drop in set-top box sales in North America.
After set-top sales plunged 29% for the three months
ended Jan. 29, 2011, the cable business recovered last fall
with a 13% year-over-year sales increase in the October
2011 quarter and was on pace to hit an annual run rate
of $4 billion.

Over all for the quarter ended April 28, Cisco reported
quarterly revenue of $11.6 billion — up 6.6% from the
year-earlier period — and net income of $2.2 billion, a
19.8% year-over-year increase.

VIDEO VIGOR

Cisco’s Service Provider Video segment sales are on
track to get near $4 billion for the current fiscal year:

Q1FY12 (ended 10/20/11) $879 million

Q2FY12 (ended 1/28/12) $1.02 billion

Q3FY12 (ended 4/28/12) $1.00 billion

SOURCE: Company reports

September