One on One with Cisco Chairman & CEO John Chambers
Tuesday, February 06, 2007
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SUSIE GHARIB: Joining us now Cisco Chairman and CEO John Chambers. Hi, John.
JOHN CHAMBERS, CHAIRMAN & CEO, CISCO SYSTEMS: Hey Susie, a pleasure to be with you again.
GHARIB: So you're forecasting revenue growth of 20 percent for the current quarter, your fiscal third quarter. That's pretty big. Where is that growth coming from?
CHAMBERS: Well, the growth for the third quarter is 19 to 20 percent in terms of Cisco and Scientific Atlanta comparing apples to oranges. The organic growth is 15 to 17 percent. The growth, Susie, is very much like we saw this last quarter. It is very well balanced across our products. Our routers, our switches, our five advanced technologies had great growth this last quarter, good chance they will again next quarter, the emerging markets, our success in service provider and our success in commercial and the consumer as well as enterprise. So really the growth is across the board and it really speaks to the changing role of the network. The network, we believe, is becoming the platform for all forms of communications in IT. We think Cisco is very well positioned to take advantage of that.
GHARIB: John, I was listening to you on the conference call that you had this afternoon with analysts and you're usually very upbeat, but I thought you were even more confident than usual and from what you were saying about your customers, it sounds like they're pretty confident as well. What's the outlook for the tech sector in general? Is it back, so to speak?
CHAMBERS: Well, Susie, I think that my confidence is based upon Cisco's strategy and how we positioned our company. We're realistic in terms of the opportunities and obviously extremely pleased with the growth that we had this last quarter and our projection for solid growth in the next several quarters which we have not been that aggressive on before. We're also realistic. We see the same thing your viewers see in terms of some of the challenges and we're going in with our eyes very wide open. And as a whole, we're very optimistic about the networking segment of the business. In terms of total capital spending or the tech sector as a whole, we don't intend to be experts there, but it does speak to communications and high tech as a whole. The network is playing a very instrumental role in the future and that's what Cisco is getting its strength from.
GHARIB: We've been hearing from some people who are saying that with the launch of this Microsoft Vista that they see a new upgrade cycle in hardware with a lot of the tech companies and so if that's the case, if you do agree with that, what would it mean for Cisco?
CHAMBERS: Well, if you look at the launch of any new software or hardware, especially by a player that's as strong as Microsoft is, it plays a role in loading the networks. But if there's a killer application that is really going on, it is video. So perhaps a year or two ago Susie. we talked about the convergence of data, voice, video, mobility driving Cisco's growth. Today it's video. You saw that with our Scientific Atlanta results which were video to the home growing over 20 percent year over year. The load in terms of our products that do broadband are growing at 50 percent year over year. So it's a very solid video growth that's actually driving our direction as much as anything else.
GHARIB: Tell me real quickly, your stock did great in after hours trading. It's been doing really fantastic since summer. Do you see this momentum continuing?
CHAMBERS: Well, if we get the growth that we're projecting and we're able to continue that into future years, then the stock would take care of itself, Susie. But I do think the network is where a lot of the action is going to occur in the industry. We think we're very well positioned on that and if we do get what we hope we can in terms of results, stock will do very well.
GHARIB: All right, that's good news for investors. Thanks so much, John.
CHAMBERS: Susie as always, thank you for having me on your show.
GHARIB: We've been speaking with John Chambers, chairman and CEO of Cisco Systems.
