Cisco Sees Cash in Volcanic Ash

Iceland's volcanic eruption spells good news for Cisco's videoconferencing efforts.
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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.

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.

The company acknowledged that UCS is in the "early stage of customer acceptance and pilots" during its recent second-quarter conference call, but said that orders increased more than 100% sequentially.

During the call, Cisco CEO John Chambers explained that the firm is "probably two quarters out" from having a "meaningful discussion" on its UCS business, which suggests that the technology could become material later this year.

In another analyst note released on Tuesday, Jayson Noland, an analyst at Robert W.Baird, also painted a rosy picture of Cisco. "Survey results from 112 worldwide enterprise resellers indicate continued improvement in the environment," he wrote. "Resellers in all regions expect solidly above-seasonal trends in Cisco's fiscal fourth quarter

and lead times remain elevated suggesting good visibility."

Noland, who raised his price target from $30 to $32, explained that demand for Cisco's switching and routing products appears robust.

Cisco shares rose 16 cents, or 0.59%, to $27.07 in pre-market trading.

-- Reported by James Rogers in New York

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