One on One with John Chambers, Cisco Chairman and CEO, Shares Success Secrets
Wednesday, November 07, 2007
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SUSIE GHARIB: As we mentioned earlier, Cisco Systems reported better than expected fiscal first quarter results. Joining us now with more analysis, Cisco chairman and CEO John Chambers. Hi, John, congratulations on a good quarter. JOHN CHAMBERS, CHAIRMAN & CEO, CISCO SYSTEMS: Thank you, Susie. It was a record quarter and we were very pleased with it.
GHARIB: You forecast also for the upcoming, the current second quarter, 16 percent revenue growth. Investors are disappointed. In after hours trading Cisco stock dropped something like 8 percent. Why the disconnect?
CHAMBERS: Well, Susie, I don't focus on the immediate term in anything that we do here at Cisco. I think two, three, five years out. We did report not just record earnings above expectations. We're at the very high end of our guidance for this next quarter as well at 16 percent growth. So if we continue to get these results, the stock will take care of itself. And if a CEO watches about how their stock performs on a day or quarterly basis, it's a mistake. They have to think longer term and when my peers think about that, I've got them.
GHARIB: Let's talk about future orders. Do you expect to see any impact from the credit crisis? I know financial institutions are big customers of Cisco. Will they postpone some of their tech spending?
CHAMBERS: Susie, one of the nice things about our business is it's so balanced around the world that even in the U.S., the small to medium business is going well, growing about 20 percent. Service providers have been on par for 11 quarters in a row with video going to the home with IPTV (ph) and what you see behind me videoconferencing expanding to tele- presence (ph) type capability. We did see some softness in the U.S. enterprise which we said could occur on our last quarter conference call. Yet we projected very strong record growth again next quarter as well. So I'm very comfortable with our ability to grow given what we see in the marketplace today with the appropriate caveats.
GHARIB: Cisco is a big, global company. Will you feel any effects of a weaker dollar? Everybody is talking about the weak dollar and the impact on American businesses. What do you see for your company?
CHAMBERS: Well, if you look at what is driving the economy in last quarter's growth of 3.9 percent was way above the economists' projections. It was driven in my opinion by two factors: exports and also the Fed's action. I think exports are going well for us. A lower dollar allows us to sell a lot more and by the way, generate more jobs here in the U.S. We've added 10,000 jobs in the U.S. over the last two decades.
GHARIB: Cisco stock has had a pretty impressive performance since May, up 30 percent but to what extent do you worry on days like today when the Dow and the NASDAQ fall sharply like they did on any kind of ripple effect on your company's stock?
CHAMBERS: Well, I focus, Susie, on what we can control and influence. I think we're about to enter the second phase of the Internet which will drive the growth of Cisco for (INAUDIBLE) for the next decade. It will enable new business models, new forms of productivity, higher standards of living for people here in America if we do that right. So I think we produce the growth we'll be fine. I can't influence some of the other factors, but I can tell you most of my customers are more optimistic in terms of the soft landing for the U.S. than perhaps what the markets indicated today. We'll see if they're right or wrong. The global economy is going very well and driving our growth and many of my peers' growth as well.
GHARIB: All right. Thank you so much for coming on the program. Hope to talk to you in the next quarter.
CHAMBERS: Susie, it's a pleasure. I'd be honored to meet with you in the next quarter again.
GHARIB: Thank you so much. My guest tonight, John Chambers, chairman and CEO of Cisco Systems.
