Will Cisco’s Routing Revenue Rise in Fiscal 3Q17?

Major players in the routing segment

According to IDC (International Data Corporation), Cisco Systems’ (CSCO) revenues fell 2.8% YoY (year-over-year) in its Service Provider and Enterprise Router segment in 4Q16. Its market share in 4Q16 was 42.2%, as compared to 45% in 4Q15.

By comparison, Juniper Networks’ (JNPR) combined Service Provider and Enterprise Router revenues rose 6.5% YoY in 4Q16. The company now has a 16.9% share in this space, as compared to 16.1% in fiscal 2016. China-based (FXI) Huawei’s Enterprise and Service Provider revenues continued to climb in 4Q16, with revenues rising 16.2% YoY.

Will Cisco’s Routing Revenue Rise in Fiscal 3Q17?

Huawei now accounts for 18.8% of the global router market, though the worldwide enterprise and service provider market rose 1.5% YoY to ~$3.9 billion at the end of 4Q16.

The global routing market is projected to be a $14 billion market, rising at a CAGR (compound annual growth rate) of 1%. In the routing space, NFV (network functions virtualization) and network management orchestration are projected to rise at a CAGR of 79.0% over the next three years.

Revenue fell 10% YoY in fiscal 2Q17

Cisco Systems’ Routing business saw a revenue fall of 10% YoY (year-over-year) in fiscal 2Q17. Revenue in this segment fell from $2.0 billion in fiscal 2Q16 to $1.8 billion in fiscal 2Q17. Cisco stated that although its Routing revenue fell for the quarter, it saw a rise in orders. Routing is Cisco’s second-largest business segment in terms of revenue.

Notably, in 2016, Cisco stated that it was well positioned to drive the transition to software-defined WAN (wide-area networking) space with its IWAN (Intelligent WAN) portfolio, which would give it opportunities in the routing space. Cisco also stated that it was seeing continued strength in web-scale customers, where core development has continued.