Speaker 1: Globile Business News twenty four hours a day cast Bloomberg
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Speaker 1: is a Bloomberg business plan from Bloomberg World Handquarters. I'm
Speaker 1: Charlie Pellot. We begin with the latest from Barcelona. A
Speaker 1: van plowed into pedestrians on one of Barcelona's busiest streets
Speaker 1: at the height of the summer tourist season, causing multiple
Speaker 1: deaths and injuries. Local media reported the driver fled the scene,
Speaker 1: but police now saying no one is at large in
Speaker 1: any bar in central Barcelona. There were reports initially that
Speaker 1: that's where a suspect had fled to Barcelona. Barcelona police
Speaker 1: are now confirming that they have made one arrest in
Speaker 1: connection with the attack. Spanish media, including El Mundo, put
Speaker 1: the death toll at thirteen. The authorities say they are
Speaker 1: treating this incident as a terrorist attack. They have not
Speaker 1: given a specific number. They do say that three two
Speaker 1: were injured, so again one suspect under arrest. Death toll
Speaker 1: reportedly at thirteen in Barcelona. US stocks worst level of
Speaker 1: the day right now. The now down two hundred one points.
Speaker 1: That's the drop of nine tenths of one percent. SMP
Speaker 1: down twenty seven down one point one percent, as stack
Speaker 1: tumbling ninety two down one and a half percent. Ten
Speaker 1: you up six thirty seconds at yield two point two percent,
Speaker 1: gold up eight night. He the oounced up seven tenths
Speaker 1: of one percent. Crude oil also hired by seven tenths
Speaker 1: of one percent. I'm Charlie Pellett. That's a Bloomberg business flash,
Speaker 1: thank you very much. Indeed it is Caroline Hikes out
Speaker 1: here in London with another than Corey jumping over in
Speaker 1: San Francisco. This is Berg, We think Tisco, we think
Speaker 1: Ian King. He's a Bloomberg News, the semi Conductor reporter.
Speaker 1: It's also covering the Cisco for US walk over Cisco
Speaker 1: Arni's olt last night, Ian covering those for us, and
Speaker 1: here in our nine sisso studios joining me right now, Um,
Speaker 1: what does this have to say Cisco? Cisco's going through
Speaker 1: this really interesting change in their business. That's um monument
Speaker 1: to the biggest ever, I would argue, right, And that's
Speaker 1: exactly what the CEO said Robbins when I spoke to
Speaker 1: him last night. He said, Look, you know, this isn't
Speaker 1: like a transition that you've seen other companies do we're
Speaker 1: moving from being a hardware company to being a software company.
Speaker 1: Nobody's ever done that, at least not at the scale
Speaker 1: that we're at. This isn't going to happen, you know, overnight,
Speaker 1: and so really that's where we are. I mean, if
Speaker 1: you're an investor, are these guys IBM, are they at
Speaker 1: a time out of context? Are they losing losing what
Speaker 1: made them great? Or are they Microsoft which is a
Speaker 1: company that people were riding off thought they had lost
Speaker 1: their their relevance, and yet have somehow gone it right
Speaker 1: there their hustles exactly exactly, Yeah, I mean give us
Speaker 1: a sense in of how quickly whether you think they're
Speaker 1: wearing on the Microsoft or the IBM side of things.
Speaker 1: Because what's also more worrying for them is not only
Speaker 1: remaining relevant in getting into the software space, but how
Speaker 1: much of their rivals offering the cloud compute are able
Speaker 1: to build their own networking equipment. Well, that's ex exactly here.
Speaker 1: I mean, this is if you look at where the
Speaker 1: energy is, if you look at where the technology is going,
Speaker 1: it's coming from Google, It's coming from Facebook, It's coming
Speaker 1: from you know, their Chinese counterparts who you know. I've
Speaker 1: already told us in non certain terms, we don't want
Speaker 1: Dell servers, we don't want storage systems from the usual providers,
Speaker 1: and now we're looking at networking and we're going to
Speaker 1: do that ourselves as well. We're very good at software.
Speaker 1: We don't need them for that. We don't need the services.
Speaker 1: We're going to do it ourselves. That is the negative
Speaker 1: for Cisco. It's like, how do you make yourselves relevant
Speaker 1: to these guys who think they're the cleverest guys in
Speaker 1: the room. Um. Cisco's answer to that as well, Actually, no,
Speaker 1: hold on a minute. These guys are relatively small right now.
Speaker 1: Yes they're growing fast, but they're they're not everything. Companies
Speaker 1: still need us. However, we have to get smarter, we
Speaker 1: have to get faster. We have to offer the software,
Speaker 1: the flexibility and the kind of services that companies are
Speaker 1: looking at Facebook and saying I need some of that too.
Speaker 1: And these are sort of software defined networks and things
Speaker 1: like that. Right So it's not just they're not out
Speaker 1: there offering database software to complete with Oracle or or
Speaker 1: or you know, Sequel server or whatever, but there, but
Speaker 1: the very nature of what they sell has changed, and
Speaker 1: that has gone from the box to the software itself, right,
Speaker 1: I mean, you're exactly right. This is this is one
Speaker 1: of the things about networking which nobody's interested in, that
Speaker 1: nobody cares about, but they perhaps should be, is you
Speaker 1: can look inside a computer and know what's going on.
Speaker 1: You can look inside the story system and know where
Speaker 1: things are not. True with networking, knowing where packets are
Speaker 1: getting dropped, knowing why something isn't working is really difficult,
Speaker 1: and it's not been something that has been very clear
Speaker 1: and as simple as checking whether or not a circuit
Speaker 1: is connecting from a point A to C exactly. You know,
Speaker 1: basically whether they're a packet of data was sent and
Speaker 1: you know if it didn't arrive, what happened in the
Speaker 1: interim nobody has a clue about. And that's it's not acceptable.
Speaker 1: In the modern world where data traffic is exponentially increasing,
Speaker 1: somebody needs to do something out that and there are
Speaker 1: lots and lots of companies trying to do that, trying
Speaker 1: to add different pieces of the puzzle, trying to allow
Speaker 1: that customization, that knowledge to to you know, have an
Speaker 1: input in how networks work and why they get faster.
Speaker 1: Cisco has been the home of everything UM and it
Speaker 1: has to step up to the challenge. I'm looking at
Speaker 1: the E M function on Cisco, so looking at where
Speaker 1: we're expecting earnings to go. And they've had what wanted
Speaker 1: six quarters of negative revenue growth. We're expecting it to
Speaker 1: falling shrinkage we've seen we've seen shrinkage just six and
Speaker 1: we're expecting seven quarters. But then they are starting to,
Speaker 1: like clawback analyst expecting it to be in the positive
Speaker 1: one to two. We're going to be flat from here
Speaker 1: on out. Basic when it comes to revenues of about
Speaker 1: twelve billion. But what does ruck Robbins really say about
Speaker 1: where what's going to be the driver and whether we
Speaker 1: can boost revenue because it's been years since we've seen
Speaker 1: significant growth exactly. I mean, you've nailed it there. I
Speaker 1: asked him this. I said, you know, they keep talking
Speaker 1: about deferred revenue all of these So there's accounting change too. Right,
Speaker 1: when you sell a box and he also services on it,
Speaker 1: most of the revenues of the day you sell the box,
Speaker 1: except for some of the revenues you's got to check
Speaker 1: in the mail. But with software it changes to sort
Speaker 1: of a street line long term about link the contract
Speaker 1: exactly and that's so that's where Chip goes. He's, oh,
Speaker 1: you know, we've now got five billion dollars and deferred revenue,
Speaker 1: that this is a fantastic sign of progress. And I said, okay, Chuck,
Speaker 1: but when does that deferred revenue become real revenue? And
Speaker 1: when does that, you know, turn this ship around and
Speaker 1: get things back into the growth mode. And he said,
Speaker 1: I'm not going to happen quickly, would be wrong to court.
Speaker 1: James Baldwin said, what happens to a dream deferred doesn't
Speaker 1: explode in the stock price. Well, I mean, you know
Speaker 1: his other responses, The biggest problem we have is switching
Speaker 1: and routing. Their two biggest businesses both decline nine in
Speaker 1: the quarter they just reported. That's obviously fairly horrific. And
Speaker 1: he said, what we've got to do is get innovation
Speaker 1: back into these core products of ours, get people excited
Speaker 1: about them, and then that will make the overall transitions. Historically,
Speaker 1: Cisco has done the three acquisitions, and that when it
Speaker 1: hasn't really benefited this. I mean, one could argue hasn't
Speaker 1: been for the stock price. You could also sy if
Speaker 1: they didn't the acquisitions of the stockward they would have
Speaker 1: they would have become three Calm or something tune for
Speaker 1: or something. But but they've spent vast billions and billions
Speaker 1: and billions of dollars, whether it's through stock or cash
Speaker 1: or both an acquisitions to keep their technology up up
Speaker 1: to time. They can still do that. They can still
Speaker 1: let that because I got seventy billion dollars in cash
Speaker 1: sitting there. That So the argument is for those that
Speaker 1: support them. Look, if anybody gets to the point where
Speaker 1: they are chilote to Cisco, Cisco has gone to just
Speaker 1: buy them, take them out. In King, thanks for walking
Speaker 1: on the holl of suh In King, who covers semi
Speaker 1: connectors and enterprise hardware for us here at Bloomberg Games.
Speaker 1: You were listening to Bloomber Markets, on Bloombergrado, Corey Johnson
Speaker 1: here in their mind sixty Studios, and uh, of course
Speaker 1: uh Carlin High in London. This is Bloomberg