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Factors That Impacted Cisco’s Data Center Revenues

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Aug. 22 2017, Updated 9:06 a.m. ET

Revenues fell 4% in fiscal 4Q17

Revenues from Cisco’s (CSCO) Data Center segment fell 4.0% YoY (year-over-year) in fiscal 4Q17 to $837.0 million. In fiscal 2017, revenues fell 4.0% YoY to ~$3.2 billion. Data Center is Cisco’s (CSCO) fifth-largest business segment and accounted for 6.9% of total revenues in fiscal 4Q17 and 6.7% of revenues in fiscal 2017.

During the company’s fiscal 4Q17 earnings call, Cisco’s CEO, Chuck Robbins, stated, “In the data center, we’re helping our customers take full advantage of a multi-cloud world that has become the norm in managing their applications and hybrid cloud solutions.”

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Strong customer adoption

Earlier in this series, we noted that Cisco aims to deliver a multi-cloud platform via its Network Intuitive initiative, which would deliver faster secured cloud applications. Cisco is optimistic about this product, as its data center supports modern and traditional applications both on premise as well as in the cloud.

Over the last four years, Cisco has led the industry in verticals such as ACI (application centric infrastructure) combined with its UCS (unified computing system) and Cloud Center solutions. As Cisco’s fastest-growing data center switching platform, ACI experienced year-over-year record growth of 38% in fiscal 4Q17.

In fiscal 4Q17, Cisco stated that its multi-cloud infrastructure portfolio, combined with cloud-based SaaS (software-as-a-service) offerings such as Meraki Cloud Networking and WebEx, experienced strong growth.

Cisco’s expertise in accelerating data center application deployments from private to public clouds has resulted in strong customer adoption. Cisco’s hyperconverged offering, HyperFlex, combined with CloudCenter is gaining traction among enterprises, driven by its scalability to support hybrid cloud strategies.

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