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Cisco Is Making a Comeback in the Enterprise Collaboration Market

Why Cisco's Stock Increased by 10% in February (Part 9 of 20)

(Continued from Part 8)

Cisco achieved positive growth from its collaboration business for the first time in a long while

After the Switching and Routing business, enterprise collaboration is the most valuable business for Cisco (CSCO). The collaboration segment includes products such as enterprise content management, enterprise voice, enterprise email, enterprise social networks, et cetera. Cisco derived about 11% of its revenues from the Collaboration business in fiscal 2Q15. This Cisco business also achieved a healthy year-over-year revenue growth of 10% in the last quarter.

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As the chart below shows, the revenue growth from Cisco’s collaboration business was negative in the prior quarters, but it turned positive in the last quarter. Cisco credited this positive growth to the fast growth in the telepresence or video conferencing business. During the latest earnings call, Cisco’s management mentioned that its telepresence business experienced 60% growth in units and 35% growth in revenues. Management also mentioned that its deferred collaboration revenue increased by 26% during the quarter.

Cisco and Microsoft remain the top two players in the enterprise collaboration market

Cisco and Microsoft (MSFT) have consistently taken the top two positions in the enterprise collaboration market. According to a report from Synergy Research Group, Cisco’s share in this market was 16% as of calendar 3Q14. Microsoft was a close second at 14% market share, while Avaya, IBM (IBM), and Polycom (PLCM) were the three smaller players in this market.

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Continue to Part 10

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