Humor me this. If Splunk’s revenue is now part of Cisco’s, why is revenue still in decline with flat growth?
22 replies (most recent on top)
28 billion spent on a technology thats in decline.Annual Revenue 4.2 Billion. Operating revenue 1 billion.
So Splunk brings 1 billion every year and it takes 28 years to Recover the 28 billion spent.
Thanks,
Math Major Chucky
Sometimes, the whole is greater than the sum of the parts.
Thanks,
Aristotle
History wont be kind to our beloved mathematical wizard!!!
During earnings it was stated production orders were up 20% YoY (9% not including Splunk). Time will tell if that will be enough to curtail the downward decline.
Not sure when this train will get derailed. It's hard to predict.
30 years ago when Cisco went all in on acquisitions. As a customer the number of release images that fail when fielded during that time would be embarrassing to anyone who cared at all about their work.
Missing cloud was the first nail in cisco's coffin. Thanks to John Chacha.
Spending 28 billion borrowed money on a dying technology is the second nail. Thanks to chucky.
Not sure when this train will get derailed. It's hard to predict.
Anyone remember when Inacom and Vantstar merged… they both thought the other one was going to save them.
Anybody else see a repeat here?
“Revenue is a lagging indicator. Orders and bookings signify growth. That has increased. Revenue recognition principles apply. If I sell 100m of hardware this quarter it shows as revenue growth if the box ships. If I sell 100m of software on 5 yr term best case revenue is 1/20th (5m) applies to this qtr.
It won't seem intuitive if you don't understand business. But the key thing is bookings and new product orders. That indicates if we are growing or shrinking.”
I think most responding to this post understand the business and the indicators in financial reporting. Bookings are a clear indicator of present and future business. Last time I checked Chucky hadn’t put much attention on bookings or future orders. He’s only been saying customers are still absorbing the orders placed from then pandemic. Was there any substantial highlights on bookings growth in the Q1 earnings call? Let me answer, no.
Nortel was circuit switching company and the missed the packet switching bus, which resulted in their demise.
You can't order a circuit switched line anymore and the telcos in the US are removing copper so packet is all that's left. Everything is moving towards some kind of Ethernet termination. Nortel 0, CIsco 1.
Cisco is a packet switching company and it missed the cloud bus.
The difference is the cloud still uses a lot of networking and while Cisco may no longer be leading they're still in the market generating many times the revenue of any of their nearest competitors.
If you want to know where Cisco went wrong on cloud networking, look no further than Chambers and MPLS spinning out the clueless only to be bought back in for a fortune and handing off their incomplete mess to others to fix. If Chambers had started building a competent development organization when he became CEO of Cisco in 1995 Cisco could have one working routing and switching operating system by now instead of a pile of broken ones.
Nortel was circuit switching company and the missed the packet switching bus, which resulted in their demise.
Cisco is a packet switching company and it missed the cloud bus. Which has brought this giant to its knees!!!
History has a habit of rhyming!!!!
In the past 20 years there were 3 successful acquisitions by cisco, where cisco made money
- Nexus(mpls spin off)
- Meraki
- Webex
All other acquisitions were flushing money through the toilet.
The catch with splunk acquisition is, cisco has over paid massive 28 billion on a decade old technology.
Most of this 28 billion is borrowed money.
Repayments and interest of this acquisition is going to bleed cisco in the years to come.
Given the hardware business of cisco has been declining and the market share has been declining steadily, its logical to expect more cuts and pressure on the survivors to do more work. I hope we don't end up like Nortel. If you watch documentaries on Nortel's demis, you can see a similar play book.
Time will tell, but I think the bottom line is Cisco overpaid for Splunk by a large margin, took on a staggering amount of debt to do so in an increasing interest rate environment, and at the same time customers are tightening their belts in the face of a challenging economic landscape. There are other options out there for cost conscious enterprises who want to perform the same functions that Splunk offers. In the same way that Broadcom is effectively pushing customers away with their insane price increases, Splunk/Cisco is pricing themselves out of many SMBs, and even some large enterprises. Only in organizations such as government entities where in many cases cost is not an issue will these high margins be allowed to continue.
Revenue is a lagging indicator. Orders and bookings signify growth. That has increased. Revenue recognition principles apply. If I sell 100m of hardware this quarter it shows as revenue growth if the box ships. If I sell 100m of software on 5 yr term best case revenue is 1/20th (5m) applies to this qtr.
It won't seem intuitive if you don't understand business. But the key thing is bookings and new product orders. That indicates if we are growing or shrinking.
About to turn 40 years old and having serious health issues. Not me, the company.
In 2025 there will be 10K layoff then the Cisco+Splunk togther will be profitable
"Should have bought nvidia stock with 27bn!"
How can we?
NVIDIA is just an AI chipmaker...Cisco is run by AIs.
There is a huge difference!!!!
Should have bought nvidia stock with 27bn!
Cisco would have benefited from acquiring Splunk long ago with that industry on the upswing had it the proper vision. The SIEM market is now highly competitive fragmented, with plenty of competition (or freebies baked in from Microsoft Azure)...if Cisco was ever banking on Splunk for a save i think its a good thought, but misguided. The play would have been to tightly couple the cyber-logging/network visibility about 5+ years ago, and bundle into large Enterprise agreements - fast forward to now, would probably be highly fruitful today. Too late.. will take years to make that a well oiled machine post M&A
Because Splunk is not as widely respected as we thought it was 10 years ago
more layoffs
Splunk priovided Cisco with some modicum of relevance with a certain class of buyer, and is large enough for GS to position as the foundation for the future of SBG
We like to think of management as stupid but they are just conniving. They don't come out and say that the core of SBG are dispirited long-timers who can't get anything done...but I am pretty sure this is recognized.
I assume in the future GS will attempt to rebuild SBG from inside Splunk and discard the dinosaurs who staff SBG now
Obviously the price to buy Splunk was insane but this was largely a matter for shareholders, not the company itself
Nice Calculation. The point is, Acquisition of splunk will temporarily arrest the top line and bottom line decline, which will enable chuck and ELT to survive for few more quarters singing AI AI AI O song....
28 billion spent on a technology thats in decline.Annual Revenue 4.2 Billion. Operating revenue 1 billion.
So Splunk brings 1 billion every year and it takes 28 years to Recover the 28 billion spent.
Thanks,
Math Major Chucky