Where most technology giants are delivering strong growth, networking player Cisco (CSCO) appears to be struggling. Cisco recently announced its quarterly results that surpassed market expectations. However, a weaker outlook on account of the global conditions sent the stock tumbling 6% in the after-hours trading session.

Cisco’s Financials
Cisco’s Q4 revenues fell 9% over the year to $12.2 billion, marginally ahead of the Street’s forecast by 0.5%. GAAP net income increased 19% to $2.9 billion. Adjusted EPS decreased 4% to $0.80, ahead of the market’s estimate of $0.74.

By segment, infrastructure platform revenues dropped 16% to $6.5 billion, Applications revenues dropped 9% to $1.4 billion, and Security products grew 04% to $814 million. Service revenues was flat. Revenues from other products declined 17% to $35 million. For the fourth quarter, subscriptions accounted for 78% of its software revenue.

By region, revenues from the Americas declined 12%, EMEA declined 6%, and APJC declined 7%. Cisco ended the year with revenues decreasing 5% to $49.3 billion, and with an EPS of $3.21. For the current quarter, Cisco forecast a revenue decrease of 9%-11%, with an EPS of $0.69-$0.71. The Street was looking for revenues of $12.3 billion with an EPS of $0.76.

Cisco’s Acquisitions

During the quarter, Cisco announced the acquisition of San Francisco-based ThousandEyes for an undisclosed sum. Set up in 2010 by Mohit Lad and Ricardo Oliveira, ThousandEyes empowers businesses to understand and improve connected experiences everywhere. Its cloud platform provides visibility into experience for every user and application over any network so that companies can deliver improved digital experiences, modernize their enterprise WAN, and successfully migrate to the cloud.

Cisco plans to integrate its strength in network and application performance with ThousandEyes’ visibility to provide customers with an end-to-end view into the digital delivery of applications and services over the Internet. The integrated service will allow organizations to pinpoint deficiencies and improve network and application performance across enterprise and cloud networks.

Prior to the acquisition, ThousandEyes had raised $110.7 million in funding through six rounds from investors including Salesforce Ventures (CRM), Thomvest Ventures, Sequoia Capital, Sutter Hill Ventures, GV, and Tenaya Capital.

Cisco’s Product Upgrades

Besides acquisitions, Cisco is also adding deeper and broader visibility and analytics across its networks and applications. It has introduced a business resiliency portfolio that offers healthcare and education solutions with simpler consumption models and services that will drive adoption across these industries.

As more and more organizations continue to adopt remote working conditions, demand for endpoint security services is growing. To address this market, it recently introduced its Secure Remote Solutions combined with Zero Trust Architecture with Duo, AnyConnect, Umbrella, and AMP for Endpoints that span its endpoint security portfolio.

Cisco’s 5G Strategy

Since late last year, Cisco has been investing in its 5G strategy. It debuted its 8000 Series product line, which is a series of carrier-class routers built with Silicon One, and the new IOS X7 operating system that is designed to reduce the cost of building and operating mass networks to run digital applications and services such as 5G data, video, and cloud. Earlier this year, Cisco Cloud Services Stack for Mobility announced that it will provide a fully validated platform for operators to accelerate the launch of new 4G LTE and 5G services to market with all the required compute, networking, virtualized, and management tools.

As Cisco continues to add to its product portfolio, it should look at acquiring companies within the 5G space. One such player that it should evaluate is Florida-based Airspan (AIRO). Set up in 1992, Airspan is a leading 4G/5G RAN hardware and software vendor that also offers Fixed Wireless
network solutions.

It has been a leader of RAN solutions and technologies and has deep expertise in the LTE and LTE-Advanced, OFDMA, Wi-Fi, and VoIP space. It has been moving toward the future with the development of solutions that combine small cells with Gbit/s backhaul and Virtualization that are the basis of its 5G products and solutions.

Recently, there has been an increased focus on the 5G products and services. Last quarter, the Trump administration announced the Clean Network Program that is focused on protecting US citizens’ privacy and American companies’ sensitive information from certain organizations. The Clean Network aims to ban all Chinese influence and businesses from its telecom carriers, cloud services, undersea cables, apps, and app stores.

The Committee on Foreign Investment in the United States (CFIUS) has previously banned Huawei and ZTE (ZTCOY) from America’s 5G infrastructure. Other American allies including Japan, Australia, New Zealand, and Taiwan have also banned Huawei’s equipment in their mobile networks.

Recently, the UK government banned Huawei from contributing critical parts to its 5G network. The restrictions are driven by government concerns on the data security norms followed by China-based companies. This offers a big opportunity for Cisco to make its presence in the 5G industry globally.

Cisco’s stock is trading at $38.27 with a market capitalization of $162 billion. It had climbed to a 52-week high of $50.28 in January. The stock has recovered from the 52-week low of $32.40 that it had fallen to in March.