Cisco Q4 2012 Earnings: Data Center Boom, TelePresence Bust

Boom Bust

First, let’s start with the good news from Cisco — and there was plenty of it:

According to Cisco CEO John Chambers:

So far, so good. Great stuff.

A Bad Video Connection

Now, one area of bad news: Cisco’s collaboration revenues — mainly involving TelePresence and high-definition video conferencing — dropped 8 percent to $992 million in the most recent quarter. Chambers blamed the decline on a “decrease in TelePresence sales” primarily amid challenges in the public sector, where collaboration revenues dropped almost 30 percent year over year in Europe.

Some pundits think Vidyo — which is rolling out a free, cloud-based video conferencing service — is further pressuring Cisco’s TelePresence sales.

Chambers tried to spin a positive story, noting that the new TX9000 immersive system “gained solid acceptance in the first quarter” and he pointed to SaaS and Cisco’s Jabber software for signs for hope.

“Our Jabber software application that enables instant messaging conferencing, voice and TelePresence video to multiple devices across most major operating systems has gained significant traction, increasing 55 percent in license volume, and Cisco WebEx increased again in this quarter solidly on a global basis,” he said.

But is 55 percent growth for Jabber — a fairly new software application — all that impressive? And can Cisco somehow convince public sector customers to open their wallets wider for six-figure TelePresence systems? The VAR Guy isn’t so sure.

Still, there’s a lot to like about Cisco’s progress in the past year. The company has regained its focus and delivered record annual results. Plus, Chambers is positioning Cisco to dominate software defined data centers. Promising moves. But that TelePresence sales challenge seems like a tall one…