Cisco's John Chambers Comments on the 'Changing World of Networking'

| About: Cisco Systems, (CSCO)

On Cisco Systems Inc.'s (NASDAQ:CSCO) Fiscal Q4 conference call, CEO John Chambers discusses the company's innovations in networking:

Tim Long - Banc of America

John, you talked a bit about the GDP environment being a little weak in the second quarter and also seeing some of your peer companies, as well, in other areas having tough quarters. Just give us your sense as to why you think it is that Cisco continues to perform much better than the peers? Is it as simple as the sales force hires, or do you think there's something else inherent in this technology that is allowing you to outperform?

How sustainable do you think that is, given that we have heard the same type of macro concerns for a few quarters and you guys continue to do well? So maybe the GDP correlation is not as strong as you thought? Thank you.

John Chambers- President and CEO

Fair comment, Tim. If you look at it, the last quarter as we shared with you, we saw a little bit of caution that perhaps some other people in the market didn't see at that point in time. We were extremely pleased obviously with the results. But the reason that I think we were so successful, Tim, is that the world of networking is changing. It's no longer about transport, it's about how you change business, how you change life experiences.

The way we're going after that is not only how you combine the OSI stack layers 1 through 7 together -- which none of our peers have attempted to do -- so we combined the routing, switching, wireless, security, other capabilities together with a common architectural approach which has huge competitive advantages in the market, which shows up in market share gains, but also has a much lower cost of ownership.

The third major component part of that is that I think people are learning how to really drive productivity and entertainment and therefore revenue streams for service providers by use of networking. It isn't just about raw transport, it's about intelligence throughout the network. As that occurs, really making that work well is one of the biggest advantages we have.

It isn't just from a technology point of view, it's how you help an automotive company like a DaimlerChrysler or how you help a service provider in a partnership achieve their revenue goals and their business process change. So we come at it from a business side as well.

If you really look at our momentum in service provider, we're really beginning to get the architectural play that I think we experienced in the mid '90s in the enterprise. That has huge implications on it. So if you look at it, I think we're in a much better position not just as you alluded to, tied to GDP or say we're moving into new markets -- either emerging markets or sales force increases -- to get growth. I think the role of intelligent networking in the network is truly becoming the platform to deliver application and services is going to be very key as we move forward. That’s what we're hearing from customers.

I guess in summary for a long answer, we're seeing that from government leaders and business leaders around the world. It's hard to put a number on it. But the requests that we have to spend time at the very top of the organization is probably up more than threefold versus a year ago. So thank you, Tim.


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