Nomura Securities on Enterprise Switching: 10G Drives Growth; Cisco Falls To New Low
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Rating Summary:
35 Buy, 27 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on Enterprise Switching: 10G Drives Growth; Cisco Falls To New Low - Enterprise switching growth accelerates despite macro headwinds
Analyst, Stuart Jeffrey, said, "The enterprise switching grew 13% y-o-y to $5.1bn, according to industry research firm Infonetics. The solid growth in enterprise switching comes despite the softness in the macroeconomic environment, and was driven by continued strength in the 10G (+28% y-o-y) switching segment, with particular strength coming from North America (+17% y-o-y) and APAC (+16% y-o-y). Cisco’s (Nasdaq: CSCO) market share slipped to a new low this quarter, slipping two percentage points to 64%, driven by declines in more commoditized 100mb and 1GB segments of the market...owever, Cisco’s share in 100mb and 10GB each slipped 1 percentage point to 55% and 66%, respectively...We remain buyers of Cisco, based on valuation and our view that street estimates for 5% EPS growth remain too low (we forecast 11% growth). Our higher growth forecast is in part attributable to our belief that some of the Switching share gains are natural cycles and that the company will see slight share improvements in the coming quarters."
HP (NYSE: HPQ) was the leading beneficiary of Cisco’s share losses in the quarter, as the company gained one point in share from 1Q to 12.2% to $616mn. Its market share is still off its 2Q11 peak of 12.8%, but the sequential improvement comes in the face of the internal disruption and change in management in the business unit.
Juniper’s (Nasdaq: JNPR) share was flat q-o-q at 2.5%. The company reported a 19% increase in switching revenue in 2Q to $140mn, of which a portion is attributed to carrier switching. Juniper gained some modest share in 1GB switching in the quarter. However, revenue in the 10Gb market was down 4% q-o-q to $42mn, according to the Infonetics data, and the company lost just under one point in share, implying traction for its high-end switches (QFX / EX) in the data center may have cooled in the quarter.
Dell’s (Nasdaq: DELL) acquisition of Force 10 continues to help the company better penetrate the switching market, as it appears to be expanding its footprint in high-end switching. Its market share is still modest at 1.9%, a small improvement over the 1.7% in 1Q. However, we note much of Dell’s share gains came from the 10G segment, according to the data, which correlates with the company’s strategic focus in increasing its footprint in the data center.
Analyst, Stuart Jeffrey, said, "The enterprise switching grew 13% y-o-y to $5.1bn, according to industry research firm Infonetics. The solid growth in enterprise switching comes despite the softness in the macroeconomic environment, and was driven by continued strength in the 10G (+28% y-o-y) switching segment, with particular strength coming from North America (+17% y-o-y) and APAC (+16% y-o-y). Cisco’s (Nasdaq: CSCO) market share slipped to a new low this quarter, slipping two percentage points to 64%, driven by declines in more commoditized 100mb and 1GB segments of the market...owever, Cisco’s share in 100mb and 10GB each slipped 1 percentage point to 55% and 66%, respectively...We remain buyers of Cisco, based on valuation and our view that street estimates for 5% EPS growth remain too low (we forecast 11% growth). Our higher growth forecast is in part attributable to our belief that some of the Switching share gains are natural cycles and that the company will see slight share improvements in the coming quarters."
HP (NYSE: HPQ) was the leading beneficiary of Cisco’s share losses in the quarter, as the company gained one point in share from 1Q to 12.2% to $616mn. Its market share is still off its 2Q11 peak of 12.8%, but the sequential improvement comes in the face of the internal disruption and change in management in the business unit.
Juniper’s (Nasdaq: JNPR) share was flat q-o-q at 2.5%. The company reported a 19% increase in switching revenue in 2Q to $140mn, of which a portion is attributed to carrier switching. Juniper gained some modest share in 1GB switching in the quarter. However, revenue in the 10Gb market was down 4% q-o-q to $42mn, according to the Infonetics data, and the company lost just under one point in share, implying traction for its high-end switches (QFX / EX) in the data center may have cooled in the quarter.
Dell’s (Nasdaq: DELL) acquisition of Force 10 continues to help the company better penetrate the switching market, as it appears to be expanding its footprint in high-end switching. Its market share is still modest at 1.9%, a small improvement over the 1.7% in 1Q. However, we note much of Dell’s share gains came from the 10G segment, according to the data, which correlates with the company’s strategic focus in increasing its footprint in the data center.
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