Chambers’ financial comments rosy, but will core market suffer?

Cisco reported its numbers, which were significantly better than estimates. Profit growth was significant, but it was the 8% revenue growth and rosy comments on the state of the recovery that made Chambers’ remarks on the call memorable.

The most significant fact about the performance in our view is that it appears to validate Cisco’s “peripheral opportunities” strategy for total addressable market growth. Cisco is working hard to make the transition from a networking company to a technology company, and there are major risks that the shift will impact its existing businesses before it builds new opportunity.

So far, Cisco appears to be avoiding those risks. There are also rumors that Cisco will be announcing a new core router, a successor to the CRS-1 line. If those pan out, it will represent a revalidation of Cisco’s carrier business commitment (which some have doubted even within Cisco).