As Cisco Systems closes the books on its latest quarter, the company is preparing to integrate gear from its Scientific-Atlanta acquisition into its product portfolio and launch a new consumer electronics division.
The company, known for selling Ethernet switching and Internet Protocol routing equipment to large companies, announced results Tuesday from its fiscal second quarter. Profits fell slightly, but the company increased its revenue 9.3 percent from the previous year to $6.63 billion.
The acquisition is expected to close sometime in the company's current quarter, which ends April 29. Chief Financial Officer Dennis Powell said he expects that Scientific-Atlanta products will contribute about $250 million to Cisco's overall revenue in the current quarter, depending on the exact date that the acquisition closes.
By the fiscal fourth quarter, which will be the first full quarter of revenue from the acquisition, Scientific-Atlanta is expected to contribute about $525 million in revenue. While the new products will provide a healthy source of revenue for Cisco, it is only a drop in the bucket compared with the company's total quarterly revenue of $6.6 billion. Powell also said he expects Cisco's revenue to continue growing between 10 percent and 15 percent for the year.
Cisco introduced at least one new home entertainment product, the Kiss DP-600, at the Consumer Electronics Show in Las Vegas last month. Right now the networked DVD player is available only in Europe, but a comparable product is expected to be released in the United States later this year, according to Charles Giancarlo, Cisco's chief development officer.
The Scientific Atlanta purchase is an important step in jump-starting Cisco's video expertise, especially in the U.S. where the majority of homes subscribe to TV from cable companies. But Giancarlo acknowledges that the company still needs to fill in some holes in its product portfolio.
"Scientific-Atlanta addresses the U.S. cable market," he said during an interview after the earnings call. "But most of the rest of the world doesn't have this infrastructure, and they don't have networked video (devices) available to play video on demand or record content. We see this as a huge opportunity."
"If I had a dollar for every company that Cisco has been speculated to buy," he said, "it would add up to a lot of money. But honestly most of the time those speculations turn out to be untrue."
Still, he did not rule out the possibility that Cisco will acquire more companies to expand its consumer electronics portfolio.
"In general we would always rather build than buy if we have the technology and business expertise," he said. "You usually get a better return on your investment that way. But sometimes it's smarter to buy."
For now, Cisco's consumer market is miniscule compared with its overall business. The company still generates the bulk of its revenue from sales of networking equipment to large companies. The rest of its revenue is split among sales to small and medium-size businesses, which account for 25 percent of sales. Its service-providers business brings in another 25 percent of revenue, while its consumer products generate only 5 percent of total revenue.
Even with the existing Scientific-Atlanta set-top boxes and yet-to-be announced consumer electronics products, Cisco is a long way from depending on the consumer market in any significant way.
Correction: Charles Giancarlo's title at Cisco was misidentified. He is chief development officer.
Apple says it's got a third-party group looking for issues at manufacturing partners it uses. Read CNET's FAQ to find out how we got here, and what the next steps are.
Tommy Jordan, the man who shot his daughter's laptop for YouTube, gets a visit from police and child protection services. Oh, and Good Morning America.
Proposal provides $140 billion for research and development of technologies such as clean energy, wireless communications, and cybersecurity--a 5 percent increase over 2012.
Along with green-lighting Google's buy of Motorola, the Justice Department today OKs an Apple-Microsoft-RIM partnership deal to buy Nortel patents, and Apple's plan to acquire Novell patents.
Chamtech's spray-on antenna uses a nano material to provide a low-power boost to antenna range. The wireless-in-a-can product may some day bring an end to unsightly cell towers.
There are a lot of things that AT&T's humongous Samsung Galaxy Note smartphone is, like a digital memo pad, a medium-size reader, and a great photo companion.
EnerG2 opens a plant to make an engineered carbon that will improve performance of energy storage devices and make storage for start-stop hybrid cars less expensive.
Join the conversation