November 15, 2012, 3:07 PM — Four things are clear from Ciscos better-than-expected Q1 FY 2013 results:
- Cisco's resolve to become the No. 1 vendor in IT
- Collaboration and TelePresence remain challenging product areas for the company
- Europe and the public sector continue to be challenging markets
- And Ciscos intent on connecting EVERYTHING
Ciscos Q1 came in ahead of Wall Street expectations and as a result, the companys stock rose 5% at the end of the day Wednesday. Revenue rose 6%, adjusted earnings per share rose 11%, order growth was solid in the U.S., edge routing, wireless and data center were particularly strong, and Q2 guidance was in-line with analyst estimates.
Yet there continue to be trouble spots. Economic conditions in Europe are still an issue, leading to weakness in orders and product revenue growth. Orders for Cisco products in the region fell 10% from last year, with enterprise decreasing mid-teens and service provider declining in the high-teens.
The US public sector vertical is also still soft, down 15% from a year ago.
Weakness in both of these markets contributed to a 2% decline in Ciscos switching and routing revenue.
Collaboration also continues to be a laggard in Ciscos product portfolio. The business was down 8% again this quarter from a year ago which was a record quarter -- just as it was in Q4, 2012. Cisco just named its third chief for the business in less than a year, and is intent on correcting recent trends.
We need to do a better job in collaboration, and will continue to invest in innovation and sales execution to capitalize on this very important marketplace, CEO John Chambers said in the Q1 conference call this week. A transcript of that call can be found on the Seeking Alpha.com site.
Some of the priorities include integrating WebEx, Jabber, unified communications and TelePresence into a single call manager, Chamber said.