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Cisco Systems (CSCO) Announces Partnership With Microsoft

Zacks Equity Research
·3-min read

Cisco Systems CSCO recently announced a new partnership with Microsoft MSFT, which will bring Microsoft Teams to the former’s meeting room devices.

Per the alliance, Cisco and Microsoft Teams will soon offer the ability to run Microsoft Teams natively on the former’s room and desk devices from the first half of 2023. Initially, six of CSCO’s most popular meeting devices, like Cisco Room Bar, Board Pro, Cisco Room Kit Pro will be certified by Microsoft Teams, followed by Cisco Desk Pro and Cisco Room navigator.

Cisco has formed this partnership with Microsoft to benefit from the growing market demand for a hybrid work environment. Microsoft Teams is experiencing growing usage, which will help Cisco expand its customer base in the enterprise communication space. Per Industry Research data, the enterprise market is expected to witness a CAGR of 17.3% between 2022 and 2028.

The recent partnership with Microsoft is amongst its various strategic alliances with global tech companies, which will help Cisco to address growing global trends.

Cisco Systems, Inc. Price and Consensus

Cisco Systems, Inc. Price and Consensus
Cisco Systems, Inc. Price and Consensus

Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote

Strategic Alliances Boost Prospects

Cisco’s shares have been negatively impacted by global supply chain challenges. The supply chain constraints resulted in a severe shortage of certain components that hurt Cisco’s ability to ship products to customers, thus hindering the top-line growth in the last reported quarter.

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Cisco’s top line growth was also impacted by the Russia-Ukraine war, which has put various business enterprises in the crosshairs of geopolitical tension. Rising inflation is also a major headwind.

Due to these reasons, Cisco has guided revenue growth for the first quarter of 2023 in the low single digits of 2% to 4% compared with the year-ago quarter. The Zacks Consensus Estimate for revenues is pegged at $13.33 billion, suggesting growth of 3.33% from the year-ago period.

Further, as it ventures into new markets, Cisco is experiencing stiff competition from the likes of Wipro Limited WIT in cloud securities solutions, Zoom and Slack in the hybrid work environment.

Wipro recently expanded its collaboration with VMware to help customers move data to the cloud at a reduced cost and operate in a multi-cloud infrastructure.

With the recent collaboration, Wipro FullStride cloud services will be able to provide its security services to customers for no additional cost and protect data while operating in a multi-cloud architecture. This is expected to help Wipro garner more customers amid rising competition.

These reasons have contributed to the fall in Cisco’s share price. The stock has tumbled 35.9% in the year-to-date period compared with the Zacks Computer - Networking industry’s decline of 37.6%.

However, Cisco, which currently carries a Zacks Rank #3 (Hold), has inked alliances with most major technology companies globally to access new technology, develop innovative products, address megatrend markets and expand the total addressable market. The company has partnerships with Apple, IBM, Viacom, Telenor, Google and Alibaba and General Dynamics GD, which are expected to enhance the company’s business opportunities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

One of its recent partnerships has been with General Dynamics Information Technology (GDIT), a business unit of GD, which is helping Cisco to maintain its position as the largest player in the networking space. The two companies have collaborated to deliver Cisco Private 5G services to various government enterprises for Internet of things (IoT) and edge use cases.

Cisco’s strategic partnerships are helping it to address long-term megatrends such as hybrid cloud, hybrid work, security, IoT, 5G and Wi-Fi6. This will help Cisco’s top-line growth in the long term.


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