Cisco gave the state of the enterprise customer and the key themes are caution and a spending pause as execs try to get a read on the global economy.
The networking giant delivered a strong fiscal second quarter and a healthy yet prudent outlook. But what Cisco CEO Chuck Robbins really did was offer a view of the enterprise that indicates a bit of limbo.
Simply put, tech spending was hit with a January pause.
Robbins said on Cisco's earnings conference call:
I would tell you that through the first 10 weeks of the quarter that was very much in line with what we expected. We were executing very much in line with how we would have expected the quarter to go. Our week 10 just of the data point was the end of the calendar year so while a number of companies have reported earlier this year, not many have actually had their quarter and in January so we ended at the end of the third week of January which we all know this first three weeks were reflective of the uncertainty that occurred in a lot of the financial markets. What I will tell you said after week 10 to those three weeks we saw customers as they were trying to digest what was going on. They paused a bit and you see customers say 'I want to just wait and see what is going on, let me take a look at this, we want to understand it a little better.
In other words, wild stock market swings are impacting corporate confidence. Another key theme for Cisco was the shift in technology spending that falls in the capital expense category (think data center build outs and campus networks) and operating expenses that would be more in line with software as a service. The shift in IT is more toward operating expenses.
That transition is one reason you see Cisco separating its software from hardware, working its ACI software defined networking platform, doubling down on its collaboration portfolio and buying subscription based businesses such as Jasper, an Internet of things cloud service.