Editor’s note; Beau Skonieczny, research analyst at Technology Business Research, takes an inside look at Cisco’s quarterly financial report. Cisco (Nasdaq: CSCO) reported its earnings Thursday. (Read about the earnings here.)

HAMPTON, N.H. – Cisco Services’ niche market focus combined with its integrated solutions portfolio continued to see success at a global scale in 4Q10

Cisco Services revenue grew 18 percent year over year as advanced services was on the heels of 15 percent growth in new products. Revenue growth in all but switch products also resulted in accompanying technical services growth.

With virtually no change in headcount, profitability for services increased dramatically, overtaking product gross margins.

Cisco Services continued to gain global traction with its Unified Computing System platform solution

Demand for Cisco’s Unified Computing System (UCS) continued to gain momentum in 4Q10, as clients from around the world implemented Cisco’s integrated infrastructure solution combining server and networking products, as well as supporting services.

Cisco won multiple UCS contracts during the quarter, including a deal with Moses Cone Health System in which the organization will leverage Cisco’s UCS platform to facilitate the transition to an electronic medical record (EMR) IT environment. Cisco also received contract awards internationally from Israel and Australia clients for UCS solutions.

International growth

Cisco’s growing international client base will help drive revenue growth outside the U.S., where Cisco Services currently generates more than 60 percent of sales.

In addition, TBR believes Cisco Services’ sales will be enhanced by its increasing focus on driving a more favorable price-to-performance ratio in its new products, as clients can leverage the savings on product spending on advanced end-to-end services and bundled solutions.

“Green IT”

Cisco’s investment in energy efficient IT solutions is paying off with a strong outlook for pipeline growth

Clients continued to flock to Cisco Services’ green IT solutions in 4Q10 as businesses sought to increase efficiencies, reduce costs and prepare their networking infrastructures for future IT innovations.

In particular, Cisco was selected by Shell to monitor its IT energy use with Cisco EnergyWise, while gradually transforming and consolidating Shell’s IT infrastructure with solutions that provide enhanced energy efficiency.

TBR believes Cisco will continue to gain momentum in the green IT solutions space as more and more customers realize the cost benefits; however, TBR believes Cisco will need to continually improve its service portfolio to compete with larger players such as HP and IBM, who are also gaining ground in energy efficient IT solutions.

We expect Cisco Services to utilize its smaller relative size to be more nimble in the global IT market, allowing it to respond to green IT opportunities in emerging markets going forward to counteract the pressures from its larger IT competitors while expanding its international revenue streams.

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