Cisco NZ sales creep up in 2014, sees gains on growing IT reliance

Revenue rose to $24.96 million in the 12 months ended July 31, 2014 from $23.94 million a year earlier, while the net loss narrowed to about $537,000 from $723,000 in 2013, according to financial statements lodged with the Companies Office.

Of that, $19.86 million in revenue was derived from related parties, down from $23.92 million a year earlier. The local unit's salary and wages bill rose 14 percent to $16.5 million in the year, and other operating expenses more than doubled to $2.03 million.

Cisco Systems New Zealand, the local unit of the global internet network group, lifted annual sales 4.3 percent in 2014, and expects to be well placed in the current year as an increasing number of firms demand greater services from web based providers using the company's systems.

Sister entity Cisco Technologies New Zealand reported operating revenue of $10.87 million in the year ended July 31, of which some $693,000 was received from related parties. The unit, which was incorporated on Jan. 29, 2013 and dormant until Nov. 24, 2013, reported a loss of $24,512 in the year.

Country manager Geoff Lawrie declined to speak specifically to the financial statements, but said Cisco's broad suite of products meant it was well placed to meet rising demand from a growing reliance on web based services.

"The breadth of the portfolio is one of the things that has enabled us to do relatively well in the marketplace," Lawrie told BusinessDesk. "It's a market that's playing well to people who have breadth and capacity to assemble things with a broad solution set."

San Jose, California based Cisco Systems is the world's largest networking equipment and systems vendor, generating a net profit of US$7.85 billion on sales of US$47.14 billion. Of that, Asia Pacific, Japan and China reported a US$403 million drop in annual sales to US$7.36 billion, with India, Japan, Australia and China contributing to the weakness.

Cisco New Zealand's Lawrie said he was upbeat about the prospects for the coming year as the government's ultrafast broadband network gets further through the building process and firms continue to demand more from their IT service providers.

"The networking part of the information technology business is a good place to be because the industry is shifting to that in terms of its relevance and interest in that as a sector, driven by things like internet of everything and cloud," Lawrie said. "All of the major driving forces in that industry are pointing to the ongoing need to get connected as it were and to connect up."

For Cisco New Zealand, security is the area where it's seeing the fastest growth as firms place more emphasis on protecting themselves from malicious cyber-attacks.

The government estimated cyber-crime cost New Zealand $625 million through 2012, according to the regulatory impact statement for the Government Communications Security Bureau Act Review, prepared by the Department of Prime Minister and Cabinet. In 2013, New Zealand's National Cyber Security Centre received an increased number of incidents reported to 219 from 134 a year earlier.

"As an industry, security is the big issue. We have to figure out how to turn it from a road block to an enabler," Lawrie said. "It's a huge part of our business now. From a percentage point of view, it's the fastest growing part of our business, where Cisco is now the largest security vendor in the world simply because people are grappling with how they deal with security implications."

Lawrie anticipates the risk profile posed by cyber security will eventually mean it will be treated as a governance issue by company boards, rather than simply an IT issue as it currently is.

Another area Lawrie cited as offering rapid growth was in supporting mobile and wireless services, such as building fourth generation (4G) mobile networks for both public and internal organisation use.

Shares of the Nasdaq listed parent company last traded at US$26.90, valuing the company at US$143 billion.