Video and services give Cisco bottom-line boost in Q1

Vendor's newer divisions outperform old-school networking gear as efficiency drive seems to bear fruit

Cisco's video and services business were the key growth engines as the networking giant enjoyed a robust first fiscal quarter, despite a decline in sales of traditional switching and routing gear.

For the three months to 27 October, total sales grew six per cent on the corresponding period last year to almost $11.9bn (£7.5bn), while operating profit rose 20 per cent to $2.65bn. The vendor's video segment was the biggest contributor to the top-line expansion, with revenue spiking 30 per cent to more than $1.1bn.

Cisco's routing and switching units both posted two per cent declines, with quarterly revenues standing at $2.05bn and $3.6bn respectively, while collaboration sales dropped eight per cent to $1bn.

Services was a bright spot during the quarter, with revenue growing 12 per cent to $2.6bn, while datacentre was Cisco's fastest-growing segment, with sales shooting up 61 per cent to $417m.

Cisco has been on a efficiency drive over the last couple of years, resulting in it shedding almost 13,000 full-time employees in a bid to become more profitable. Chief financial officer Frank Calderoni claimed the Q1 results demonstrated the success of the measures taken.

"Once again, we delivered strong financial performance with continued execution on our long-term strategy of growing profits faster than revenue and driving long-term value to our shareholders," he said. "We remain confident in our financial strategy and in our ability to consistently execute moving forward."