Tiernan Ray at Barron’s blogs that HP Networking’s market gains appear to be coming directly at Cisco’s expense. He notes that HP’s Q4 earnings detailed a 300% increase in networking revenue thanks to the 3Com acquisition and that HP’s own ProCurve products saw a 50% increase year over year. Meanwhile, Cisco’s revenues reported earlier this month were solid, but the company issued guidance for next quarter that was very soft, about $1 billion lower than Wall Street analysts were predicting.
An important catch by Ray: During Cisco’s earnings call, the company said sagging sales to state and local governments, down about 25%, were a major challenge. However, HP CFO Cathie Lesjak claimed her company’s great quarter was partially due to rising sales in state and local government accounts. Is this an early indication that government IT shops are looking to HP as a cheap alternative to Cisco in their networks? Will the private sector follow?