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What Can You Expect from Cisco’s Fiscal 1Q17 Earnings?

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Part 2
What Can You Expect from Cisco’s Fiscal 1Q17 Earnings? PART 2 OF 8

Can Cisco Continue Revenue Growth in Its Security Business?

What is network security?

Network security consists of measures adopted to prevent and monitor unauthorized access and the misuse of computer networks. It involves authorization of access to data in a network that’s controlled by a network administrator. Network security is accomplished through hardware and software.

Can Cisco Continue Revenue Growth in Its Security Business?

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Major players in the security space

According to IDC (International Data Corporation), the worldwide security appliance market grew YoY (year-over-year) in vendor revenues and unit shipments in 2Q16 (fiscal 4Q16 for Cisco). This was the 12th consecutive quarter of YoY growth in the security appliance segment.

Worldwide vendor revenues in the worldwide security appliance market in 2Q16 rose ~5.8% YoY to ~$2.8 billion. Units rose 15.2% YoY for a total of ~659,000 shipments. In 2015, worldwide security appliance revenues rose 9.9% to $10.6 billion.

Cisco Systems (CSCO) continued to dominate the security appliance market in 2Q16 with a 16.3% share. Other top players in this space include Check Point Software Technologies (CHKP), Palo Alto Networks (PANW), Fortinet (FTNT), and Blue Coat, with shares of 13.0%, 12.1%, 9.8%, and 4.2%, respectively, at the end of 2Q16.

Revenue growth in fiscal 4Q16

In fiscal 4Q16, Cisco (CSCO) continued to maintain a significant YoY growth of 16% in its Network Security segment. Deferred revenues rose 29% YoY driven by Cisco’s ongoing shift from hardware to more software and subscription services. Revenues rose from $466 million in fiscal 4Q15 to $540 million in fiscal 4Q16.

Now let’s take a look at Cisco’s data center business.

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