Cisco’s High-End Core Routing Products Are Growing at a Fast Pace
Cisco Expects Double-Digit Revenue Growth after 4Q15 Slowdown
Cisco’s high-end core routing products grow more than 100% in 4Q15
Cisco Systems’ (CSCO) routing segment, called Next Generation Network (or NGN) Routing, is Cisco’s second-most-valuable business segment after its switching business. Cisco derived about 16% of its revenues from the NGN Routing segment in fiscal 4Q15. The company has managed to improve revenue growth rate for its routing segment. The year-over-year revenue growth rate for Cisco’s routing segment was more than 3% in 4Q15.
The company credited this improvement to its high-end core routing products such as CRS-X and NCS. During the conference call to announce its 4Q15 earnings, Cisco management said these products grew more than 100% year-over-year. Management also mentioned that there is a growing demand for these products from telecom service providers.
During the 3Q15 earnings conference call, Cisco said Verizon (VZ) was moving toward building its 100 Gbps metro fiber-optic network and had decided to test and deploy Cisco’s NCS routing solutions. These products are helping the company increase its lead in the core routing market. However, the company acknowledged that it needs improvement in the edge routing market.
Huawei and ZTE find success in China
According to a report from Dell’Oro, new core routing products drove a double-digit growth for the core routing market. In particular, the report mentioned Alcatel-Lucent’s (ALU) 7950 XRS routing product, which made large market share gains in this market.
Huawei and ZTE also found success in the last quarter, especially in China (FXI). Service providers in China preferred routing products from these companies over Cisco and Juniper Networks (JNPR), although Alcatel-Lucent showed decent performance in China that quarter.
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