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Cisco (CSCO) Expands Routed Optical Networking Solutions

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Cisco Systems (CSCO - Free Report) recently announced the launch of new products and solutions in its Routed Optical Networking solution business to aid customers in saving up to 45% in power and 70% in real estate space for equipment.

Cisco has been ramping up investments in sync with its technology strategy to help communication service providers reduce the cost of building and extend their networks to connect with more people, places and things.

The newly launched products and services like NCS 1010 Open Line System for Optimized Transport, New Bright 400G ZR/ZR+ Pluggable Optics and Cisco Crosswork Automation are focused on sustainability components that will not only help customers reduce opex and capex but also reduce carbon impact on the environment.

Cisco’s new solutions will aid customers in transporting any legacy service over a converged IP infrastructure, provide advanced automation software service assurance and minimize IT needs for set-up and operations. This, in turn, will lead to reduced maintenance windows.

The launch of its latest products and solutions will help increase the utility of its Routed Optical solutions among its current users and attract new customers.

Cisco’s Expanding Portfolio to Drive Price Performance

Cisco’s recent initiative to expand its Routed Optical Networking Solutions will help the company reduce the volatility surrounding its top-line growth.

The recent solutions by Cisco that specifically target communications service providers help reduce expenses in their daily operations. This will separate the company’s services from its competitors and help win market share.

Cisco’s third-quarter 2022 results were negatively impacted by the war in Ukraine and COVID-related lockdowns in China, which began in late March. The lockdowns resulted in a severe shortage of components that hurt Cisco’s ability to ship products to customers.

Revenues in the third quarter of 2022 inched up only 0.2% year over year to $12.84 billion and lagged the Zacks Consensus Estimate by 3.70%.

Ceasing operations in Russia impacted the company’s revenue growth by $200 million, while the China lockdowns hurt the top line by $300 million. Cisco has lowered its revenue guidance for the ongoing quarter.

Unfavorable economic and market conditions and the uncertain geopolitical environment are evident from investors’ bearish sentiments, which have been showing across the broader tech industry. Cisco, along with its industry peers Arista Networks (ANET - Free Report) , Juniper Networks (JNPR - Free Report) and NETGEAR (NTGR - Free Report) , saw their stock price decline in the year-to-date period.

Shares of Cisco have tumbled 31% in the year-to-date period compared with the Zacks Computer - Networking industry decline of 30.5%.

Arista shares have lost 31.2% in the year-to-date period compared with the Zacks Communication – Components industry’s decline of 23%.

Juniper shares have fallen 18.3% in the year-to-period compared with the Zacks Wireless Equipment industry’s decline of 27.4%.

Cisco’s peer in the Zacks Computer and Networking industry NETGEAR saw its shares slump 33.9% in the year-to-date period.

The company’s strategy to help reduce carbon emissions will help attract ESG investors. Per Bloomberg, Global ESG assets are on track to exceed $53 trillion by 2025 — a positive boost courtesy of the pandemic and green recovery in the United States, EU and China.

This will help Cisco’s shares turn around in the long run.

Cisco’s short-term growth remains tepid, and the current market scenario signals a further decline in stock prices. While this might not be the best time to buy the share, existing stock holders should retain the scrip for a longer period to experience positive ROI.

Cisco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.