Among the major product categories...

Routing: B

Revenue grew 14 per cent, driven by high-end routing at 25 per cent and more specifically by the CRS-1 core router at 150 per cent.

Switching: C-

Revenue grew only 3 per cent. Fixed configuration switch sales grew while modulars declined because of evaluation of the impact of the new Nexus 7000 and 5000 data center switches.

Advanced Technologies: B+

This segment, which includes unified communications/collaboration, video, security and wireless, grew revenue 17 per cent. Particularly strong were unified communications at 45 per cent, WebEx conferencing and collaboration product at 20 per cent, and TelePresence videoconferencing, which grew 1,000 per cent from a very small base. Cisco says more than 500 units of TelePresence have been ordered since the system's introduction in October 2006.

Services: B+

This is fast becoming a key high growth business for Cisco. Revenue was US$1.6 billion, up 15 per cent from a year ago. Cisco is looking to grow services 20 per cent per year and have it account for one-fifth -- or roughly US$8 billion -- of the company's overall revenue.

Other highlights

Other highlights in the quarter included shipment of the 4 millionth Integrated Services Router (ISR). The ISRs are branch routers with multiservice capabilities, including voice, and one of Cisco's most successful product lines.

Cisco also announced intentions to acquire data center switch start-up Nuova Systems; unveiled its next-generation data center switch, the Nexus 7000, and Nexus 5000 from Nuova Systems; and its next-generation edge router platform, the ASR 1000.

Routing and data center switching will be key for Cisco to hit its overall 12 per cent to 17 per cent growth target. So will mergers and acquisitions, according to UBS Warburg analyst Nikos Theodosopoulos.

"Longer term, we believe Cisco will have to aggressively pursue large scale M&A in order to drive sales growth towards its target range of 12 per cent to 17 per cent," Theodosopoulos writes in a bulletin on Cisco's third quarter. "Data center and unified communications appear to us as areas of solid growth potential."