Fireside Chat: Pipe Dreams and AI Realities — Networking's Midlife Crisis

Our #AIinNetworking Report just published (download at: https://ngi.fyi/ainetwork24yt) ! 

In this fireside chat, report authors, AvidThink's Archana Khetan (contributing analyst) and Roy Chua discuss what they learned in putting together the report. They will cut through the hype and provide context on:

- Why more #AI in networking and why now

- #PredictiveAI and #GenerativeAI - how they see the respective applicability

- Top use cases for #AIOps, #AIinNetworking and timeframes

- Milestones on the journey to #AutonomousNetworks

- Recommendations for CIOs and tech leaders at enterprise and carriers

https://www.youtube.com/watch?v=YdC_tXzCRvg&t=0s

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Cisco's Q4 Boosted by Splunk Integration Despite Revenue Decline

 Cisco announced its financial results for the fourth quarter and fiscal year 2024, reporting a revenue of $13.6 billion for Q4, slightly above its guidance range. The company's product order growth saw a 14% year-over-year increase, with a 6% growth excluding Splunk. However, revenue for the quarter decreased by 10% compared to the previous year, reflecting broader market challenges. Cisco's strong margins continued to impress, with a GAAP gross margin of 64.4% and a non-GAAP gross margin of 67.9% for Q4, the highest in two decades.

For the fiscal year 2024, Cisco reported total revenue of $53.8 billion, a 6% decrease from the previous year. Despite the revenue decline, the company achieved solid growth in software and recurring revenue metrics, bolstered by the integration of Splunk. Total subscription revenue reached $27.4 billion, representing 51% of Cisco's total revenue. Additionally, the annualized recurring revenue (ARR) hit $29.6 billion, marking a 22% year-over-year increase, with $4.3 billion contributed by Splunk.

Looking ahead, Cisco provided guidance for the first quarter and full fiscal year 2025, projecting revenue between $55.0 billion and $56.2 billion for the year. The company remains focused on driving growth in AI, cloud, and cybersecurity, while maintaining strong capital returns. Cisco also declared a quarterly dividend of $0.40 per share, reflecting its commitment to returning value to shareholders.

Key Highlights:

• Q4 FY 2024 revenue: $13.6 billion, down 10% year-over-year.
• FY 2024 revenue: $53.8 billion, down 6% year-over-year.
• Strong margins: Q4 GAAP gross margin of 64.4%, non-GAAP gross margin of 67.9%.
• Software and subscription growth: $27.4 billion in subscription revenue, 51% of total revenue.
• Annualized Recurring Revenue (ARR): $29.6 billion, up 22% year-over-year.
• Dividend: Quarterly dividend of $0.40 per share.

"We delivered a strong close to fiscal 2024, with steady customer demand and order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of AI," said Chuck Robbins, CEO of Cisco.

https://newsroom.cisco.com/c/r/newsroom/en/us/a/y2024/m08/cisco-reports-fourth-quarter-and-fiscal-year-2024-earnings.html

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Cisco's Jonathan Davidson Steps Aside, Jeetu Patel to Lead Unified Product Team

Cisco announced several strategic changes to adapt to the evolving technology landscape and better support its customers in modernizing infrastructure, mitigating cyber risks, and leveraging data. Jonathan Davidson, who has been leading Cisco Networking, is stepping down to serve as an advisor to CEO Chuck Robbins. In response, Cisco is consolidating its Networking, Security, and Collaboration teams into a single organization, now led by Jeetu Patel, who assumes an expanded role as Cisco’s EVP and Chief Product Officer. This new structure aims to accelerate product innovation, unify the company's portfolio, and enhance customer experiences as Cisco integrates the Splunk product line into its operations.

Cisco is consolidating Networking, Security, and Collaboration into one organization.

• Jeetu Patel, now Cisco's EVP and Chief Product Officer, will lead the unified team.
• Integration of Splunk products will be part of this new structure.
• The reorganization focuses on driving innovation and delivering unified solutions.
• These changes were detailed in a blog post by Cisco's CEO, Chuck Robbins.

https://blogs.cisco.com/news/bringing-our-portfolio-together

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Telstra Expands 5G and Fiber Networks Amid Mixed FY24

 Telstra reported FY24 financial results, revealing a mixed performance across its business segments, with total income rising by 1.0% to $23.5 billion. The company’s mobile division remained a standout performer, with a 4.5% increase in income to $10.7 billion, driven by strong growth in postpaid, prepaid, and IoT services, alongside a 24.6% surge in wholesale revenue. Despite these gains, Telstra faced challenges in its Fixed – Consumer & Small Business (C&SB) and Fixed – Enterprise segments, where income fell by 2.3% and 2.7% respectively, contributing to a 4.2% decline in overall EBITDA to $7.5 billion. However, the company’s underlying EBITDA grew by 3.7% to $8.2 billion, reflecting its ongoing efforts to streamline operations and reduce costs.

Telstra made significant strides in its network infrastructure, particularly through the expansion of its 5G coverage, which now reaches 89% of the Australian population. The company also continued the development of its intercity fiber network, laying the groundwork for five new routes set to begin construction in 2025. Telstra’s T25 transformation plan remains on track, focusing on enhancing customer experience, strengthening network leadership, and achieving its sustainability goals, including an increased carbon reduction target.

Despite the challenges faced in certain segments, Telstra’s commitment to infrastructure growth and customer service positions it well for the future, with key investments in spectrum and network upgrades expected to support long-term growth.

Overall Financial Performance:

• Total income increased by 1.0% to $23.5 billion.
• EBITDA declined by 4.2% to $7.5 billion, while underlying EBITDA grew by 3.7% to $8.2 billion.
• Profit for the period fell by 12.8% to $1.8 billion, with underlying profit up 7.5% to $2.3 billion.

Mobile Business Growth:

• Mobile income up 4.5% to $10.7 billion, driven by a 5.6% increase in mobile services revenue.
• Strong growth in wholesale revenue (+24.6%) and IoT services (+2.1%).

Fixed-Line Operations Challenges:

• Fixed – Consumer & Small Business income down 2.3%, impacted by declines in core connectivity and content services.
• Fixed – Enterprise income decreased by 2.7%, with notable declines in Data and Connectivity (DAC) and Network Applications and Services (NAS).

Network Expansion and Upgrades:

• Achieved 89% 5G population coverage, with 54% of mobile traffic now on 5G.
• Expanded the intercity fiber network, with five new routes planned, including key connections between major Australian cities.
• Invested $1.3 billion in spectrum licenses to enhance 5G capabilities.

Sustainability and T25 Transformation:

• Increased carbon emission reduction target to 70% by 2030, with significant investments in renewable energy projects.
• Continued progress on the T25 plan, focusing on cost reduction, network leadership, and customer experience improvements.

https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-i/financial-results-for-the-full-year-ended-30-june-2024.pdf

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Lumentum's FY24 Sales Dip 23% as Cloud and Networking Segments Face Headwinds

Lumentum reported its fiscal fourth-quarter and full-year 2024 financial results, revealing mixed performance amidst challenging market conditions.

Fiscal Fourth Quarter 2024 Highlights

• Net Revenue: $308.3 million, a 15.9% decline from the previous quarter.
• GAAP Operating Loss: 43.3% of revenue, reflecting deepening losses.
• Non-GAAP Operating Margin: Narrowed to -0.3%, compared to 4.1% in the prior quarter.
• GAAP Net Loss: $252.5 million, translating to a loss of $3.72 per share.
• Non-GAAP Net Income: $4.0 million, or $0.06 per share.

Full Fiscal Year 2024 Highlights:

• Net Revenue: $1.36 billion, down 23.1% year-over-year.
• GAAP Operating Loss: 31.9% of revenue, indicating significant financial strain.
• Non-GAAP Operating Margin: 2.8%, a sharp decrease from 19.2% in fiscal 2023.
• GAAP Net Loss: $546.5 million, or $8.12 per share.
• Non-GAAP Net Income: $68.7 million, or $1.01 per share.

“We exceeded our guidance midpoints for both revenue and EPS in the fourth quarter. We booked record orders for datacom chips used in data center applications and saw emerging positive trends in the broader traditional networking market,” said Alan Lowe, President and CEO. “We are making significant progress executing our strategy to broaden our cloud and AI customer base, which will lead to accelerated growth in calendar year 2025.”

Market Segment Performance

• Cloud & Networking: Revenue of $254.7 million in Q4, an 18.8% decline from Q3.
• Industrial Technology: Revenue of $53.6 million in Q4, marking a slight 1.7% increase from Q3 but a 36.4% year-over-year decline.

For the first quarter of fiscal 2025, Lumentum projects net revenue between $315 million and $335 million, with a non-GAAP operating margin ranging from 0% to 3.0%, and non-GAAP EPS between $0.07 and $0.17.

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Telstra and Optus Extend 3G Network Closure to October 2024

Telstra and Optus have announced an extension to the closure of their 3G networks, now set for October 28, 2024. This additional time will be used to intensify public safety awareness efforts, ensuring that all 3G users transition to 4G and 5G networks before the shutdown. The extension aims to address concerns and prepare users, particularly those dependent on 3G for emergency services, medical devices, and IoT systems.

• 3G networks to start closing on October 28, 2024.
• Telstra and Optus to launch a public safety campaign to ensure a smooth transition.
• Users must verify device compatibility with 4G/5G for continued service, especially for critical applications.
• 3G closure is essential for expanding 4G/5G services across Australia.

Telstra CEO Vicki Brady emphasized, “We have been communicating to customers about the need to prepare and make the move for almost five years… our support for customers won’t end the day the network closes.”

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GCT Semi Partners with Samsung on 4G/5G Chipsets

GCT Semiconductor signed a Memorandum of Understanding (MOU) with Samsung Electronics to accelerate the development and adoption of advanced 4G/5G chipsets and modules. This collaboration aims to enhance the global 4G/5G ecosystem, particularly for OEM/ODM device makers, and to support wireless operators worldwide, including in critical sectors such as mission-critical public safety and the oil industry.

• Partnership Focus: Joint development of 4G/5G chipsets and modules.
• Ecosystem Expansion: Strengthening the 4G/5G ecosystem globally, with a focus on device makers and wireless operators.
• Target Sectors: Support for industries like public safety and oil, including Saudi Arabia's Aramco.
• Technical Collaboration: Samsung to provide test environments and interoperability support for GCT's chipset certification.

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Telstra's AI Path to Autonomous Networks

How is Telstra leveraging AI to transform network operations and management?

Channa Seneviratne, Technology Engagement & Advancement Executive from Telstra explains:

- AI is automating key business processes and managing network complexity through machine learning algorithms

- Predictive maintenance and self-healing closed-loop assurance are enabled by analyzing millions of alarms and performance indicators

- Generative AI ingests documentation and past event history to help smart people triage incidents and resolve issues faster

https://ngi.fyi/ainetwork24-telstra-channa4

Want to be involved our video series? Contact info@nextgeninfra.io

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Accelerating AI with Telstra's Inter-City Fibre

What role will Telstra $1.6 billion inter-city fibre upgrade programme play in acclerating Australia's AI future?

Channa Seneviratne,Technology Engagement & Advancement Executive from Telstra, explains:

- Telstra is investing $1.6 billion in a new optic fiber highway connecting all Australian capital cities

- The company has already laid 1,800 km of new inter-city fiber, enabling high-speed data transport

- Microsoft, as a foundation partner, plans to connect their data centers using this inter-capital fiber network for AI applications

https://youtu.be/fnqWTYx1gcg

Have a tech update that you want to brief us on? Contact info@nextgeninfra.io!

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