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Cisco Sees Cash in Volcanic Ash

SAN JOSE, Calif. ( TheStreet -- Iceland's unpronounceable volcano may be wreaking havoc in airports across the globe, but could spell good news for Cisco (CSCO - Get Report) as it ramps up its videoconferencing efforts.

With millions of air travelers stranded following the eruption of the Eyjafjallajökull volcano last week, businesses across the world are scrambling to arrange meetings via videoconference.
Volcano Iceland

Cisco, which reports its third-quarter results next month, clinched its $3.4 billion acquisition of Norwegian videoconferencing specialist Tandberg earlier this week, and confirmed that the volcano has placed its communication technology firmly in the spotlight.

Speaking during a conference call on Monday, Cisco explained that companies are flocking to its videoconferencing technology in the wake of the volcanic eruption, reported Reuters.

"We have seen a huge spike in usage," said Fredrik Halvorsen, former Tandberg CEO and head of Cisco's telepresence division. "The only evidence is anecdotal, but you will not get a demo room in any of the Cisco facilities."

Telepresence, a form of high-end video conferencing, has become something of a Cisco mantra in recent years, and the technology lets users share information such as corporate presentations on screen.

Cisco had more than 550 customers for its telepresence offerings when it reported its second-quarter results earlier this year, although CEO John Chambers described this as just the "tip of the iceberg." The Cisco chief also promised that the firm will start to break out its telepresence revenue in its third-quarter results.

The gearmaker, which sent shockwaves through the tech sector when it entered the server market last year, is getting plenty of analyst love.

"Cisco is enjoying an upturn in its business with orders and revenues accelerating broadly across regions and product lines," wrote William Choi, an analyst at Jefferies & Company, in a note released on Tuesday. "Our checks suggest Cisco is gaining traction with its new UCS servers."

Choi, who maintained his Cisco buy rating, raised the company's price target from $30 to $32. "We believe Cisco's April quarter is tracking well," he added.

Cisco, which competes with Hewlett-Packard (HPQ - Get Report) and Juniper (JNPR - Get Report), recently ramped up its UCS strategy, unveiling new blades and rack-mounted servers which it says will significantly boost UCS networking capacity and compute power. More than 400 customers have purchased the company's server technology, according to Cisco.
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