Cisco Systems (NASDAQ: CSCO) reported Q3 EPS of $0.57, $0.02 better than the analyst estimate of $0.55. Revenue for the quarter came in at $12 billion versus the consensus estimate of $11.97 billion.

"We delivered a strong Q3, executing well despite the challenging environment," said Chuck Robbins, Cisco chief executive officer. "I'm pleased with our performance today as well as the progress we're making in transitioning our business to a more software and subscription focus, which we'll continue to apply across our entire portfolio."

Deferred Revenue -- was $15.3 billion, up 8% in total, with deferred product revenue up 9%, driven largely by subscription-based and software offerings, and deferred service revenue up 7%. Cisco continued to build a greater mix of recurring revenue as reflected in deferred revenue.

Days Sales Outstanding in Accounts Receivable (DSO) -- was 33 days at the end of the third quarter of fiscal 2016, compared with 33 days at the end of the second quarter of fiscal 2016, and compared with 37 days at the end of the third quarter of fiscal 2015.

GUIDANCE:

Cisco Systems sees Q4 2016 EPS of $0.59 - $0.61, versus the consensus of $0.58.

One important thing to keep in mind that is not mentioned much regarding SDN and its threat to CSCO is that Software Defined Networking (SDN) which runs on cheaper boxes will be a subscription service, this may hit Routing and Switching vendors over the first few years, but over the long term, I gotta believe it will more than make up for the lost sales in the high margin hardware.  This is a point not highlighted by analysts that are fretting over CSCO's future.

IMO, if anyone can make that transition well is CSCO.

Similarly, NOK now has a strong presence in the SDN arena via the ALU acquisition.