During Cisco's recent fiscal fourth quarter, the company's UCS business enjoyed year-over-year growth of 129%, exceeding an order run rate of $1.1 billion. The company also added around 2,000 new UCS customers, bringing its total to 7,400.
It's not just hardware, though, where Cisco is eyeing future upside. Experts, for example, expect the company's revamp to inject a shot of adrenaline elsewhere in its product portfolio."Cisco's restructuring efforts are designed to drive more accountability, more focus, and a more rapid pace of innovation," explained Jayson Noland, an analyst at Robert W. Baird, in an email to TheStreet. "Cisco believes that its biggest growth drivers are virtualization -- collaboration and video -- these trends underlie what Cisco calls the 'phase two build-out of the Internet,' which the company believes will drive the next wave of global productivity gains." Cisco predicts a 9.6% compound annual growth rate in the collaboration market between now and 2013, with the video market growing a massive 18.5%. The data center market, in contrast, is expected to grow at 8%. Set against this backdrop, collaboration technologies such as WebEx Web conferencing, Quad enterprise networking and TelePresence, a form of high-end video conferencing, will prove key weapons. In a clear nod to this trend, Cisco already has started to push its TelePresence wares, traditionally aimed at large firms, into medium-sized businesses. The next big leap for the company, though, will be tying its different collaboration products together, according to ISI Group's Marshall. "I think it's a piecemeal approach today, but if they had more of a unified approach, that would probably generate some revenue synergies and make customers happier as well," he said. Cisco will update investors on its restructuring when it reports first-quarter results, something which will prove key in delivering future innovation. "Cisco is quite a bit tougher company than it was six months ago," said Matt Robison, an analyst at Wunderlich Securities. "They have combined the engineering aspects of their routing and switching businesses [and] they have combined the engineering efforts of their WebEx and collaboration businesses -- those fiefdoms are not there any more."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV