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Cisco (CSCO) Terminates Smart Cities Plan Amid Pandemic Woes

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Cisco Systems (CSCO - Free Report) recently dropped its initiative to enable digitization in modern cities under its Cisco Kinetic for Cities platform.

Cisco Kinetic for Cities is an application-enabled platform, which is delivered as a cloud-based service. It integrates and organizes sensor data from city infrastructure sensors and other sources in order to drive resident engagement and improve the quality of life by generating new revenues and job opportunities.

According to The Wall Street Journal, the company has terminated its Cisco Kinetic for City product software services. It intends to realign its investments around its key business of networking equipment and security. The coronavirus outbreak has constrained local government’s potential to spend their budget on these projects.

The company also stated that it would reduce $1 billion in expenses and lay off employees in the wake of changing consumer spending patterns due to the pandemic.

Strength in The Webex Platform to Fuel Growth

Cisco’s shares have lost 6.9% year to date compared with the Zacks Computer – Networking industry’s decline of 6.4%.

In the first quarter of fiscal 2021, the company’s Applications revenues plunged 8% year over year to $1.38 billion mainly due to a decline in Unified Communications and TelePresence endpoints. However, the decline was partially offset by strength in Webex.

Notably, the coronavirus-induced work-from-home wave has bolstered demand for Webex video conferencing and business productivity offerings among customers. The company stated that in October, Webex hosted approximately 600 million participants, which was twice the number it had hosted in March.

Moreover, earlier this month, the company introduced three new devices, namely Webex Desk Camera, Webex Desk Hub and Webex Desk, to its Webex device portfolio. With these launches, the company intends to enhance customer experience in a hybrid-work environment, which involves a mix of remote working and in-office working.

Additionally, Cisco revealed WebexOne, the new Webex App Hub. The platform facilitates the integration of other applications within the Webex app to deliver multiple capabilities such as calling, messaging, meetings, devices, intelligence and analytics.

Further, this Zacks Rank #3 (Hold) company announced integrations with Box (BOX - Free Report) , Dropbox, Miro, MURAL, Salesforce, ServiceNow (NOW - Free Report) and Workplace from Facebook (FB - Free Report) to enhance Webex experience. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Furthermore, in October, the company completed the acquisition of BabbleLabs, to improve video meeting experience with an artificial intelligence-driven technology, which delivers noise removal and speech enhancement on the Webex platform.

Moreover, new additions to the Webex platform, such as Webex Room Navigator, a return to office solution and Webex Legislate, designed to assist global governments in critical functions, are major positives. Expansion of the Webex platform to include innovative offerings along with strong customer acceptance of its existing products bodes well for the company’s growth prospects.

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