Why Cisco CEO Chuck Robbins Isn't Worried About the Company's Latest Earnings
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Version 0 of 1. Wall Street may be growing impatient with Cisco Systems Inc.'s (CSCO) progress on its business transformation, but CEO Chuck Robbins isn't letting that affect his confidence. The networking giant still seems to be getting dragged down by its two largest businesses, switching and routing, which have experienced steady sales declines for the past few years. Cisco has been trying to offset that weakness by investing in software-as-a-service businesses such as security, as well as in other high-growth areas like the cloud and the Internet of Things. These areas are expected to bring some stability amid shifts in its legacy hardware business, and provide more predictable recurring payments. Robbins hopes that in doing so, he can rekindle the kinds of revenue growth Cisco was known for in the past. Since taking over Cisco in 2015, Robbins has led a vast restructuring of the business by cutting costs, steering the company through several rounds of employee layoffs and outlining a plan for the company's transformation, largely by moving toward software and away from hardware. To some investors' chagrin, that transition is taking some time to show up in Cisco's financial results. Cisco reported its seventh-straight quarter of year-over-year revenue declines on Wednesday and said it expects that to continue in the first quarter. Newer businesses such as security also showed slower annual growth than Wall Street was looking for. As a result, shares dipped 4% to $31.03 on Thursday, and are only up 2% the year. The Cisco chief defended his company's ongoing transition, however, in an interview with The Street on Thursday, saying the shift has already made an impact on areas of Cisco's business. "When you're going through a transition, you have to look at different metrics," Robbins said. "At the same time, we executed extremely well on our business model for the year." More of What's Trending on TheStreet: |