CISCO MAKES DRASTIC MOVE TO GAIN CONFIDENCE

Cisco has not been doing well with its returns and investors are uneasy. Cisco has to make some major changes in order to restore investor confidence, hence the recent decision to start getting out of the consumer business. This week Cisco announced that it will stop making the Flip camera, a popular pocket-sized video camera. A change that shocked many because of the money that Cisco spent only a couple of years ago for the technology from a company called Pure Digital.
The big change was an effort for the business to realign itself to focus on selling its core products like Cisco Network Equipment. This network-centric platform strategy will focus on how to help their enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings.
Cisco bought Pure Digital, the maker of the Flip camera, in 2009 for $590 million. The decision to stop making the camera is a hard pill to swallow since the Flip products are considered market leaders and Pure Digital remains far and away the leading consumer video camera company.
Cisco needed to do something drastic to show Wall Street that it was getting back on track. For more than two decades, Cisco has dominated its core markets of Internet Protocol routing and switching. It has provided networking equipment to almost every large company, government entity, broadband and telephone service provider, and thousands of small and medium businesses around the globe.
Unlike many other tech companies, Cisco has managed to weather dips in the economy and almost always emerges from recessions stronger than it did going into them. CEO John Chambers is viewed as managerial guru and technology oracle. Investors, customers, and even governments listen carefully to what he says and the tone of his comments for glimpses of advice and insight which have helped the business stay strong.
As Cisco moved into new markets, sales in its core businesses slowed and Cisco lost market share. While Cisco still dominates in the IP routing market, it has been more challenged in its Ethernet switching business, where it faces stiff competition from a slew of competitors, including Hewlett-Packard and Chinese manufacturers, such as Huawei. Investors have begun questioning whether the company can hit its long-term growth projections of between 12 percent and 17 percent.
Cisco has a long history of growing its business through acquisition to enter new markets. In fact, its lucrative Ethernet switching business was the direct result of an acquisition in the mid-1990s. But for much of its history, Cisco has kept it acquisitions close to its core business: Internet and corporate network infrastructure.
In the past five or six years, Cisco has ventured beyond its core competencies as it tries to enter new markets. The company's first major foray into the consumer market was its 2003 acquisition of home routing company Linksys.
For several years, Cisco toyed with the idea of offering more products in the consumer space like Used Cisco Hardware. Then, at the Consumer Electronics Show in Las Vegas in 2009, Chambers revealed Cisco's ambitions for the consumer market. He said that he expected Cisco's consumer business to generate between $5 billion and $10 billion over the next few years.
Cisco's consumer strategy has largely been one failure after another. Cisco's home-grown products, such as the Linksys Wireless Home Audio system and the Umi telepresence product have all been priced too high for consumers. And even though Cisco acquired a successful consumer business with the acquisition of Pure Digital, it has managed to stifle growth in that product area.
Flip has actually lost market share since Cisco acquired it in 2009, even though overall sales of products in this category have increased 5 percent between 2009 and 2010. Flip, which had led this product category in early 2010 with 26 percent market share, had a disappointing 2010 holiday season. The business unit's sales fell 19 percent versus the prior year, and its market share dropped to 17 percent. Analysts attributes the decline in Flip camera sales to strategic marketing missteps, and more aggressive competition, as opposed to any evidence of an underlying fall in demand.
But slowing sales momentum is not likely the main reason that Cisco decided to abandon the Flip product. The biggest problem for Cisco was likely rationalizing the thin product margins in the consumer business. Cisco is used to getting profit margins in the 60 percent to 70 percent range. But consumer electronic products are lucky to get profit margins in the low 30 percent range. Even though Flip was already an established brand, its cameras, which generally sell for between $100 and $200, were likely not profitable enough for Cisco.
Still, the Flip camera could have been an attractive and profitable business to another company, even if Cisco felt it was a drag on its earnings. While Cisco does not break out sales of individual products, it is estimated that Flip camera sales total about $400 million annually. This is small compared with Cisco's total yearly revenue of about $40 billion, but sales of this product could have been significant to a potential acquirer. Questions are being raised as to why the Flip product line, which is a growing market, was just not sold by Cisco. Cisco’s comment was that after a detailed analysis, and it was determined that the best thing to do was to shut down the business. Others believe that that the reason was because Cisco may be using the technology at another time so they would not want to sell it off.
Cisco does acknowledge that it still sees video as an important part of its strategy. They also stated that the knowledge they have gained about video and the people who use it have helped them with advancing the company with their core products.

Microsoft, Cisco Alumni Use Tech Savvy to Get Giants to Series

Bloomberg

 

The San Francisco Giants, backed by owners from Microsoft Corp., Cisco Systems Inc., Yahoo! Inc. and Intel Corp., are bringing Silicon Valley knowhow to bear as they take on the Texas Rangers in the World Series.

Under former Microsoft General Counsel Bill Neukom, who took over as managing general partner in 2008, the team is increasingly using technology to hone players’ skills and draw more fans. The Giants also put a bigger emphasis on pitching after years of relying on Barry Bonds’s home runs.

The Giants use motion-sensor suits to help evaluate throwing and hitting mechanics and a specially outfitted pitching machine that shoots different-colored balls at more than 100 miles per hour (160 kph) to help batters overcome blind spots. The team also is the first to use software that sets ticket prices based on supply and demand, similar to airlines or hotels. Such innovations, along with players’ raw talent and a $357 million waterfront ballpark, have helped boost the club’s value almost fivefold since the ownership group took over.

“The point is to be restless about where technology can help us on the baseball side and on the business side,” Neukom, also the Giants chief executive officer, said in an interview in the team’s offices at AT&T Park. The Giants got an early lead in the series last night, beating the Rangers 11-7 in game one.

Franchise’s Value

The ownership group, called San Francisco Baseball Associates LP, bought the Giants for $100 million in 1992, saving them from moving to Florida. The team is now worth $483 million, making them the ninth-most-valuable franchise among the 30 clubs in Major League Baseball, according to Forbes magazine. The Giants also own a third of Comcast Sports Net Bay Area, the cable channel that carries their games.

The Giants’ backers, who get seats between home plate and the dugout along the third-base line, include Arthur Rock, a former Intel chairman and Apple Inc. director; Yahoo board member Arthur Kern and the company’s former president, Jeff Mallett; Cisco executive Dan Scheinman; and venture capitalist Paul Wythes. Hewlett-Packard Co. co-founder William Hewlett was an owner before his 2001 death.

“We’re talking about some of the premier guys in Silicon Valley,” said Larry Baer, the club’s president and chief operating officer. In addition to the technology industry veterans, the 31 owners include investor Charles Johnson, chairman of Franklin Resources Inc., a mutual-fund company in San Mateo, California.

Monetary Boost

Reaching the World Series is worth “several millions of dollars” in additional revenue, Baer said, without elaborating. About 4,000 new season ticket applications have been received by the club since the beginning of September, when the team began its push toward clinching the 21st National League title in its 127-year history. The Giants haven’t won a World Series since moving to San Francisco from New York in 1958.

“The real benefit is 2011, where you can drive season tickets, where you can drive sponsorships, where we can drive pricing,” said Baer, 53.

Playing in the World Series will bolster the Giants’ season-ticket sales, merchandise orders, endorsement deals and TV revenue, said Richard Walden, the head of sports business at JPMorgan Chase & Co.’s Private Bank unit. Still, consistently winning year after year does more for a team’s value than a single championship appearance, he said. JPMorgan helped the Giants finance their ballpark, which opened in 2000.

Long Run

“It will translate over time if they maintain the same discipline with regard to the on-the-field and off-the-field management of the club,” Walden said. “It doesn’t necessarily make a huge difference unless you have a long history of winning.”

The team’s investors aren’t seeking a short-term moneymaker, Neukom said.

“The basic business model is to invite investors who are passionate about baseball to make an investment and to recognize, however, that it is not a near-term strategic investment,” Neukom said. “If you want to have a fund for your grandchildren to go to private schools in case the public schools aren’t what you want them to be, then don’t put that money here.”

Neukom, who became an owner in 1995, orchestrated Microsoft’s legal defense against antitrust allegations by the U.S. government in the 1990s. He first started working with Microsoft after Bill Gates’s father asked Neukom to help the younger Gates build the software company, which had about a dozen employees at the time.

Gates’s Pitch

Neukom, 68, also helped give Gates some pointers on baseball. In the late-1980s, Gates was invited to throw out the first pitch at a Seattle Mariners game. To practice the day before, Neukom, Gates and Mariners catcher Dave Valle went into the woods behind Microsoft’s headquarters for a few warm-up throws.

“He threw about six pitches, went back to work and the next night in the Kingdome he threw a nice pitch,” Neukom said.

Neukom took over as the team’s managing general partner after former Safeway Inc. CEO Peter Magowan stepped down. Magowan and Baer led the effort to purchase the Giants and build the ballpark adjacent to San Francisco Bay.

When the Giants sought investors to help keep the team from moving to Florida in the 1990s, technology executives were an obvious option because of Silicon Valley’s proximity to San Francisco, Baer said. The technology hotbed, home to Apple, Intel and Hewlett-Packard, is about 40 miles from the city.

“We were dialing for dollars,” he said.

Dot-Com Boom

The Giants’ ballpark was the first privately financed major league venue since Los Angeles’s Dodger Stadium in 1962. The effort was aided by the dot-com boom, Baer said. It would have been tougher to get funding to build the ballpark after the bubble burst in 2000, he said.

The stadium was the first to offer Wi-Fi Internet service to fans in 2004. Now the Giants are exploring ways to distribute content on mobile devices and social networks, Neukom said.

When he took over, the team was five years into a six-year playoff drought and rebuilding after Bonds’s departure. Bonds, who set home run records as a Giant, saw his career marred by steroids allegations. He is scheduled for trial in March on charges of obstruction and lying to a federal grand jury in 2003, when he said he never knowingly took the drugs.

Neukom aimed to create a new vision and wrote a manifesto called the “Giants Way,” outlining priorities, including identifying and nurturing talent, teamwork and conditioning.

The Giants’ four starting pitchers in the World Series came up through its minor league system. That includes two-time Cy Young Award winner Tim Lincecum, who pitched 5 2/3 innings in last night’s game. The bearded reliever, Brian Wilson, and rookie catcher Buster Posey also were drafted by the team.

“We’re very proud of that,” said Neukom, who was showered with champagne in the team clubhouse after the Giants defeated the Philadelphia Phillies to win the National League pennant and earn a spot in the World Series. “If we’re playing good baseball, lots of other good things will follow.”

Cisco Falls After Sales Forecast Misses Analysts' Estimates

Bloomberg

 

Cisco Systems Inc., the world’s largest maker of networking equipment, fell as much as 12 percent in Nasdaq trading after forecasting sales that missed analysts’ estimates and saying the recovery may be slowing.

The stock had its biggest intraday drop in more than three months, falling $2.73 to $21 at 9:30 a.m. New York time on the Nasdaq Stock Market. Revenue in the current quarter will be between $10.64 billion and $10.83 billion, the San Jose, California-based company said on a conference call. Analysts surveyed by Bloomberg had estimated $10.95 billion.

Spending by global companies on information technology equipment will slow to 4 percent next year as the economy weakens, according to Goldman Sachs Group Inc. While Cisco is expanding into more than 30 new markets, the company said concerns about the European economy and job growth in the U.S. caused it to be conservative in its forecast for growth in the fiscal first quarter.

“There are obviously headwinds,” said Catharine Trebnick, an analyst at Avian Securities Inc. in Boston, who has a “positive” rating on the shares. “The growth to get back to a normal economy is slower than anticipated.”

Juniper Networks Inc., the second-biggest networking-gear maker, fell as much as 9.7 percent on the New York Stock Exchange. JDS Uniphase Corp., the maker of fiber-optic equipment, slid as much as 9.7 percent on the Nasdaq and storage-computer maker NetApp Inc. lost as much as 10 percent.

Unlikely Double Dip

Chief Executive Officer John Chambers, 60, said the company was seeing “unusual uncertainty” and getting “mixed signals” about the health of the economy. While many of its customers were planning on 2 percent growth in the second half of the calendar year, the pace of the recovery in the U.S. and Europe was less clear, Chambers said. That doesn’t mean the company expects the economy to worsen, he said.

“We’re not making a call on the economy going down,” Chambers said yesterday on a conference call. “I think the probabilities on a double dip, or whatever you want to call it, are relatively low.”

Fourth-quarter sales climbed 27 percent to $10.8 billion, the company said in a statement. Analysts had predicted $10.9 billion in the period ended July 31. Net income jumped 79 percent to $1.94 billion, or 33 cents a share, from $1.08 billion, or 19 cents, a year earlier.

Excluding some costs, fourth-quarter profit was 43 cents a share, above the 42-cent average estimate.

“There is some growing evidence that the economy is starting to have an impact,” said Erik Suppiger, an analyst at Signal Hill Capital Group in San Francisco. He has a “buy” rating on the shares and doesn’t own them.

Billions for Acquisitions

Investors look to Cisco as an indication of the health of the technology industry because the company dominates the market for routers and switches, products that direct the flow of Internet traffic. Large companies account for most sales of switches, while phone and Internet-service providers typically buy the more expensive routers.

Cisco took advantage of the economic slump by making acquisitions. It paid more than $4.5 billion to buy seven companies since the start of 2009 as businesses delayed spending on infrastructure during the recession.

The acquisitions of Tandberg ASA, which sells lower-cost videoconferencing products, and Pure Digital Technologies Inc., which makes the Flip video camera, were aimed to position Cisco for faster growth as the economy recovers.

By promoting video cameras and videoconferencing gear, the company aims to generate even more Internet traffic, increasing demand for its routers and switches. Global data traffic probably will more than double every year through 2013, according to Cisco.

Hiring Workers

Cisco said it hired 2,000 workers last quarter and would add an additional 3,000 to help its burgeoning businesses grow globally. That signals confidence in a recovery, said Simon Leopold, an analyst at Morgan Keegan & Co. in New York.

“There’s an element of good news in this forecast,” said Leopold, who rates the shares “outperform” and doesn’t own them. “This is a company that’s hiring, not firing.”

Cisco, EMC And VMware Coalition Nets Unified Management Software For Virtual, Cloud Environments

from Network World

Cisco and EMC, and subsidiary VMware, this week revealed their plans to advance data center technologies via the Virtual Computing Environment coalition, which could have EMC ultimately providing management software to span heterogeneous virtual and cloud computing environments.

According to EMC, the coalition news also incorporates the company’s recently re-branded, integrated management software portfolio. As part of the news blast, EMC also introduced Ionix Unified Infrastructure Manager software, which the company says is “designed to support a wide range of enterprise management consoles.”

EMC says the product will manage Vblock Infrastructure Packages that are, according to press statements from the coalition members, “validated platforms of engineered, integrated IT infrastructure from Cisco, EMC and VMware, that deliver a breakthrough total cost of ownership and pervasive virtualization at a scale to meet today’s most demanding use cases.”

Industry watchers say with several management software acquisitions under its belt, EMC is able to provide significant configuration and change management technologies to its customers. For instance, the company purchased nLayers for application discovery and mapping technology in 2006. The next year the EMC picked up Voyence for its network change and configuration management technology. EMC acquired ITIL software maker Infra in 2008, and in 2009, EMC bought Configuresoft for its server configuration technology. All these buys could help EMC provide the configuration know-how needed to handle next-generation environments, according to Forrester Research.

“EMC has built up a remarkable [configuration and change management] portfolio. The nLayer discovery, coupled with Infra, Voyence and Configuresoft, gives EMC Ionix an edge over the competition in CCM. Data Center Insight is certainly the best solution on the market today,” an October Forrester Research report reads.

Still, EMC is missing some key components required for a complete data center management package. Advanced tools for application performance management would help the vendor, Forrester says, but it does have strength in managing the virtual world. The problem could be displacing existing vendors.

“EMC Ionix may be building for the future, but its competition is present in the data centers today and may be difficult to dislodge tomorrow,” the report states.

But not all industry watchers are convinced the coalition will enable the three vendors to advance their management and other technology efforts via partnerships with third-party vendors, not directly involved with the Virtual Computing Environment coalition.

“It seems like EMC and Cisco are trying to merge without merging -- and dragging VMware along for the ride. Even if they can pull off the coalition, I think it will be challenging for either the coalition or the individual companies to effectively partner with any other vendor,” says Jasmine Noel, principal analyst and co-founder of Ptak, Noel and Associates. “It will be interesting to see whether VMware's leading market share is sustainable as other partner relations cool off. Just look at what happened to Cisco's relationships with IBM/HP/Sun after it announced unified data center.”

One management shipping software maker involved in Cisco’s Unified Computing System (UCS) launch earlier this year says its relationship with Cisco remains unchanged following the news of the coalition.

“BMC BladeLogic is still the only systems management offering integrated and OEM’ed by Cisco for UCS and this [news] in now way changes the business relationship between BMC and Cisco,” a BMC spokesman says.

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Wi Fi Direct For Home Consumption

Story from Business Week

A consortium that includes Intel, Cisco, and Apple is set to release new technology called Wi-Fi Direct that will turn a slew of gadgets into hotspots

Going Wi-Fi is about to get a lot easier. For many consumers, setting up an in-home Wi-Fi connection point is something of a hassle. Before you can enjoy the convenience of logging onto the Web without cables and wires, you need to hook up some gear and create your own "hotspot."

But that's set to change come mid-2010, when a tech upgrade will make it easier for users of consumer electronics to exchange files between electronic gadgets.

On Oct. 14, the Wi-Fi Alliance, a tech industry consortium, said its members will release technology that effectively turns gadgets into mini access points, able to create wireless connections with other Wi-Fi-enabled gadgets or broadband modems within a radius of about 300 feet. The alliance includes Intel (INTC), Cisco Systems (CSCO), Apple (AAPL), and more than 300 other makers of the equipment that runs Wi-Fi networks, often used to provide wireless Web connections in homes, cafés, hotels, and airports.

Sales Erosion Possible

The new technology, called Wi-Fi Direct, will be built directly into consumer electronics and automatically scan the vicinity for existing hotspots and the gamut of Wi-Fi equipped devices, including phones, computers, TVs, and gaming consoles. Owners of most existing Wi-Fi-enabled devices will be able to upgrade to Wi-Fi Direct with a simple software download.

While the revamp may make life easier for consumers and business owners, it may erode sales of other Wi-Fi compatible equipment. For starters, Wi-Fi Direct may curb demand for routers and other products that make up the $1 billion annual market for Wi-Fi access points, now present in about 30% of U.S. homes. "The IT department doesn't have to set up an access point," says Victoria Fodale, a senior analyst at In-Stat. "Same thing in the home. You can do the same thing with less equipment." Cisco and Netgear (NTGR) are among the biggest sellers of Wi-Fi equipment.

The feature also could disrupt usage of wireless Bluetooth technology that, for example, helps users of the Apple iPhone play games with each other outside a wireless network. In the future, some consumers may use Wi-Fi Direct instead. Though Wi-Fi connectivity tends to drain battery life faster than Bluetooth, it's also faster and allows for transfer of richer multimedia content like video.

Marketing Blitz on the Way

For Cisco, Wi-Fi Direct could make up for lost sales of Wi-Fi access points through other Wi-Fi-enabled equipment including camcorders. The company didn’t make a representative available for this story.

Members of the Wi-Fi Alliance plan to promote their new technology with a major marketing blitz. Intel has already begun briefing retailers, who will promote the feature in their stores, says Gary Martz, senior product manager at Intel. The chipmaker will also heavily promote the capability in the first quarter of 2010 as it unveils its next-generation Wi-Fi chip package for computers.

Chipmaker Marvell (MRVL), meantime, is planning to collaborate with its consumer-electronics partners to mark enabled devices with special stickers and to promote the capability through ads. "We will make a big splash with Wi-Fi Direct," says Bart Giordano, product marketing manager at Marvell.

A Boon for Smartphones

Almost half of the 760 North American consumers surveyed in May by In-Stat said they use their Wi-Fi-enabled devices for more than connecting to the Internet. "We feel that it opens up a whole new set of applications and use cases," Giordano says. "Wi-Fi Direct will really drive the next generation of growth in [the use of Wi-Fi] consumer devices."

The feature could boost usage of Wi-Fi capabilities in smartphones and television sets in particular. "It makes adding Wi-Fi to devices that don't have Wi-Fi more compelling," says Kelly Davis-Felner, marketing director at Wi-Fi Alliance. Marvell is already talking to makers of TVs, few of whom offer Wi-Fi connectivity today but are now considering adding the capability to let users wirelessly transfer photos and video from their Wi-Fi-enabled cameras, camcorders, and netbooks directly onto TV screens.

There's also growing interest from manufacturers of cheaper cell phones, Giordano says. Today, Wi-Fi can be found mostly on high-end smartphone models. "The new use cases are really going to allow the technology to proliferate among devices it's not been considered for," Giordano says. "We are expecting that this will drive a lot of growth for us." Worldwide, shipments of Wi-Fi-enabled cell phones should rise from 64.9 million units last year to 314 million units in 2013, according to consultant IDC. "This technology is going to be ubiquitous in every notebook and netbook in 12 to 18 months; it's going to be a very fast ramp," Martz says. "And I think that's a pretty conservative [estimate]."

Cisco's Data Center Love Fest

Originally Posted to The Wall Street Journal

A dozen or so tech executives did everything but sing Kumbaya as Cisco Systems unveiled its widely anticipated entry into the computer business.

The general outlines of the announcement were already pretty well known by this point: Cisco will offer “systems” that combine networking gear, servers and software. The goal is to make the data centers that run businesses and the Internet more efficient. At Monday’s event, in San Jose, Calif., Cisco christened the new approach “unified computing.”

The launch event–which was shy on details such as pricing of the products–was basically a love fest, moderated by John Chambers. Cisco’s CEO was joined via TelePresence, Cisco’s high-end video-conferencing system, by the chiefs of many of the tech companies who were involved in the project in one way or another. No one talked much about what the new Cisco system does. But they agreed about its impact.

A sample: “It’s going to change the game,” said Joe Tucci, CEO of storage maker EMC; “John, you’ve changed the game,” added Bob Beauchamp, CEO of software company BMC. Chambers bounced from CEO to CEO, who each contributed a few minutes of puffery.

Later, people talked about how chief information officers, the (mostly) men who control corporate tech budgets, would have to start thinking about their data center spending and indeed Cisco differently. And that, ultimately, is the point of today’s announcement. In the data center, one company owns the relationship with the buyer and everyone else just supplied parts. Right now, Cisco is a parts company–it sells the networking gear that people tack on to whatever else they buy.

The new system is intended to make Cisco the most important tech company in the data center, the strategic relationship that matters most to buyers, and the company that dictates what other equipment customers buy. In that regard, the event was a preview for what Cisco hopes happens in the wild.

Cisco CEO Sees Harder Times Ahead

As posted in the Wall Street Journal:

A 27% drop in quarter-on-quarter profit is not what Cisco System Inc. nor their shareholders were hoping for but that is the most recently posted figure for the networking giant. The announcement comes in the midst of large-scale cutbacks in business technology spending on networking services, colocation services, and data centers.

The big Silicon Valley maker of networking gear said revenue fell 7.5% in its fiscal second quarter, which ended Jan. 24. It also signaled that conditions had worsened, predicting revenue in the current period could drop 15% to 20% from a year earlier.

"It is now clear that we are in a global economic slowdown," Chief Executive John Chambers said Wednesday in a call with analysts. He said it is difficult to make an accurate prediction given the current economic climate, but added that "we will obviously be impacted."

The San Jose, Calif., company is one of the first to report earnings that include January, and its results are a closely watched barometer of corporate technology spending.

Overall, Cisco's orders for the second quarter shrank 14%, but in January orders were down 20% from a year ago.

Cisco's corporate customers have steadily cut the amount they have spent on networking and colocation technology over the last year, though some of those losses have been offset by phone and cable companies, which have bought Cisco gear in order to keep pace with increasing Internet traffic. But in the January quarter these U.S. companies placed 30% fewer orders than the year-ago quarter, Cisco said.

"No one is looking for a turnaround yet," said Jeff Evenson, an analyst at Sanford C. Bernstein & Co. He added that Cisco appears to be doing a good job of controlling its costs, which offsets the decline in sales.

Mr. Chambers has pledged to reduce Cisco's spending by $1 billion this fiscal year by implemented a hiring freeze, reducing travel and similar measures. On Wednesday, Mr. Chambers said some job cuts are likely, though not across-the-board layoffs.

Despite the recession, Cisco has continued to move into new markets. Examples include consumer-electronics, such as a home speaker system unveiled in January, and Cisco is believed to be developing a server system that would take it for the first time into the computer business.

Cisco ended the quarter with about $29.5 billion in cash, and Mr. Chambers has said he sees the downturn as a chance to expand.

Cisco has also used its cash to help finance purchases for its customers. The company says that it provided $2.1 billion in financing for its customers in first half of 2009.

Cisco reported net income in the second quarter of $1.5 billion, or 26 cents a share, down from $2.06 billion, or 33 cents a share, a year earlier. Revenue declined to $9.09 billion from $9.83 billion.