Cisco Systems, Inc. (NASDAQ:CSCO) Q3 2018 Earnings Conference Call - Final Transcript
May 16, 2018 • 04:30 pm ET
continues to kind of drag that growth down? And then I have a follow-up.
Kelly A. Kramer
Yeah. So in general, I think the trends on both routing and service provider video, which is in the other bucket have been consistent. And we're not assuming any improvement in either of those.
So I would say our guide includes what we see. We feel really good about the rest of the portfolio, actually. And we see very good growth there, but those two trends are not improving. So that's basically what I have included.
Okay. Then, Kelly, could you -- thanks for that -- could you also comment on the optics of sales? It's picking up a little in the guide, at least implied and I'm wondering if you could maybe give us any color on what's moving around in OpEx for Fiscal Q4?
Kelly A. Kramer
Yeah. Sure. On OpEx, it's mainly driven by -- the increase is mainly driven by the acquisitions we've run, specifically AppDynamics. As you know, when we bought AppDynamics, very early stage. We're in heavy investment phase with them. So that's part of it as well as we've consolidated now BroadSoft. And then that also has a fairly high OpEx impact. If I back out -- if you look at my OpEx growth for the quarter, which was up a little less than 6%, 4 points of that alone is just purely the acquisitions.
And that's, as I mentioned, the impact of acquisitions on my top line and it's hurting me on EPS. It's mainly in the OpEx line. So that's what's driving that. We're being very disciplined within the rest of the business to managing the portfolio. So I think it'll continue kind of in that range as we look forward to Q4, but that's kind of the underlying driver.
Great. Okay. Thank you.
All right. The next question, please.
Thank you. Ittai Kidron from Oppenheimer & Company. You may go ahead, sir.
Thanks and congrats on a good quarter. Chuck, I had a couple of questions. First, on the Catalyst 9K, good progress, but help us understand how big is your Catalyst installed base from a customer standpoint? What percent of it do you really think the Cat 9K is relevant to? Because it's hard to gauge whether you're moving too slow or too fast. 40 customers a day sounds like a lot, but maybe for a company like Cisco it's not fast enough.
So help me understand how do you think about driving that throughout your installed base especially with now Arista potentially coming to the marketplace. And then second question, I had a question about China. Clearly, relations there have not been on the good side recently. And you've been somewhat a little bit more optimistic on that country over the last year. What are you seeing out of there and how do you take that into your outlook commentary?
Okay. First of all, thanks, Ittai and thanks for the positive comments. On the 9K, I think