Cisco stock shoots up 3% after Amazon officially denies that it’s going to become a competitor

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REUTERS/Mike Blake

  • Amazon says it will not produce its own networking switches, contradicting a recent report.
  • Cisco CEO Chuck Robbins and Amazon CEO Andy Jassy talked it over on the phone directly, says a Cisco spokesperson.
  • Cisco stock shot up about 3% after the denial.

Amazon Web Services, the retailer’s cloud computing business, has officially denied a report that indicated the company was going to produce its own networking equipment that would compete with Cisco.

Cisco shares went up as high as 3.6% in after-hours trading following the news.

“Cisco and AWS have a longstanding customer and partner relationship, and during a recent call between Cisco CEO Chuck Robbins and AWS CEO Andy Jassy, Andy confirmed that AWS is not actively building a commercial network switch,” a Cisco spokesperson told Business Insider.

MarketWatch originally reported on Cisco’s statement earlier on Wednesday. An Amazon spokesperson confirmed the contents of the statement to Business Insider.

Originally, the Information reported that AWS was considering the possibility of selling its own network switches – a key component in networking infrastructure, and one of Cisco’s flagship product lines. Amazon was reportedly looking into undercutting Cisco on price. Following that original report, Cisco shares sunk as much as 4%.

Some analysts were skeptical of how much Amazon could damage Cisco’s core business, especially among the large enterprises that constitute the company’s core customers.

Analysts at Nomura Instinet said in a note last week that while Amazon-made switches might appeal to AWS customers, companies typically use multiple clouds at once, making it a tougher sell. Plus, Cisco provides lots of after-sale customer support that it would be difficult for Amazon to replicate, the analysts said.