Cisco CEO: Growth in 3-5 Years

" Cisco Systems giving a market a bright spot to data networking giant topping Wall Street estimates and making positive comments about customer spending trends. Joining us now from San Jose California is John Chambers is the chairman and CEO. Of Cisco systems' John Bryant -- in good to chat with -- again sir thanks very much for coming on. It's a pleasure Brad has always and they can get to be with you. But before you start Brad are West Virginia Mountaineers and you know you and -- gonna bring it up and I appreciate adding he's gonna go an entirely different direction now I'm getting John you know. I yeah. So we're we're Brothers and then -- Hell -- you're really hit more hurts -- are your sales. Doing better than my Hokies and we'll kind of sales trends are you hearing from your customers a temporary turnaround or do you see the beginning of a multi year network upgrade cycle."

" I think we are on our way back out to economic recovery as a country and around the world they're obviously some major hurdles in front of us. Brian that's how we talk several quarters ago we said first quarter this year what felt like a bottom -- last. We said the court that followed bad felt like it was a good upturn native is a tipping point the market. In this quarter really added meet today at we sold good. Acceleration sequential quarter Q4 two Q1 forest. That was one of the best we've seen in five to six years in it was a crossed all aspects in the US. In pretty good around the world a major turn around versus what we've seen just six months before."

" John some discounting are you doing how having to do to close sales on the call. I know you mention price competition it was brutal in the emerging markets ways. --"

" Well it was very very challenging -- in India emerging markets. It's an area probably we need to be a little bit more aggressive in. But our gross margins were the best they were in four years -- 66 point 3% from a financial point of view it's about a solid quarters you get. Our financial model all operating income as a percentage of revenues back to normal mode 29%. Which is world class. And we -- good balance and almost every financial management that we have."

" The use -- John obviously you guys have been a deal making machine making a variety of deals over the last couple years while the pace of -- continue. And what is the ultimate goal for Cisco what kinds of strategic deals do you want to make it can give us a cool. As to what Cisco will look like from a revenue standpoint a couple years down the road."

" Brad I think it's an excellent question you never want to lose track of where you want to be three of five years out. Many companies get focused on this quarter this year but we try to do -- catch key market transitions and say how do we change that whether it's in the data center. Whether it's an ability weather team collaboration whether it's in video. You saw -- for acquisitions in the last month and that we speaks to our organization structure built around -- beat teams. Able to do wonder two things not like command -- control. Environments that barely able to do a half dozen things in the same month so if we do our job right and you take passport three to five years out. -- should be in the mid teens twelve to 17% but all the appropriate caveats. That's what I think -- you gotta hold me accountable for we do these interviews in the future. And I think what you're seeing is that -- and our most recent quarters indicate we're getting back to normal great time periods. Still some challenges and benefits and job creation -- sector still some steps that government either help or are perhaps slow us down on. But I think the numbers on the novel they've been very solid multiple quarters and wrote. It has special interests of -- is the US. The US in large enterprise companies -- and a slowdown and we said it in your show back in August of 2007. They are now starting to turn up they went from minus 20% growth just one quarter got to 10% growth this quarter we -- similar improvements are matters which were down. 30% year over year just one quarter got this quarter they were down in mid single digits so it feels pretty good in terms the recovery although there's still some challenges in --"

" That's. John at one of the acquisitions that you announced it's yet to be sealed the -- and barred the video conferencing. Company what are you seeing the demand from their customers. For videoconferencing or are you trying to get them on board with that with this acquisition."

" We know vegan it's interesting whether it's. Or government leads around the world or CEOs like JPMorgan Chase or. GE or Procter & Gamble or Wal-Mart. Business leaders understand that not only will communication change forever to these type of products. But also their business models how they bring their workers to where the work he has as opposed to. Having to travel. Like it did in the past. So you begin to see video -- killer application just a quarter ago we announced the acquisition. The flip which is probably in many. DI. Video capability. Can quarter of the Internet with networking capabilities and drag you back to take pictures of our West Virginia came in. Virginia Tech came in exchange him over the Internet. And I do think it will be the killer application. It's 830 billion dollar market so while amber it's important to us it is surrounding air in terms of the total size of the market. And I think you'll see us move across all collaborative aspects of the same time. States. 500 million in travel for Cisco 500 million a year. Add but it may -- changes our business model and if there's one area that is a killer app for the future and terms of productivity and communications it's Padilla."

" John want to bring up what your neighbors there Intel yesterday's smack of the antitrust lawsuit by your attorney general Andrew Cuomo. Obviously may be sending a signal about side you guys are are huge -- industry you do have a lot of competition -- juniper and others. But how do you manage your growth and also be wary of what appears to be a very new business regulatory environment."

" Well first of all if you like Cisco's -- competitors. You have very strong competitors like HP Microsoft is often competitor. IBM at times to compete in partner. Do you have players like Lucent Alcatel juniper while weigh in China which got a thirty billion dollar loan from their government. The good news and the bad news is I have lots -- competitors across many aspects of the board and I'd be surprised if we have some of the problems that some of our peers -- adding. And fact just two nights ago we went to corporate secretary magazines. Top award in the US for governance compliance and ethics and while we're -- far from perfect company. And on the far from perfect leader we do pretty well in this area round -- we communicate very open with the regulatory boards around the world. I'd be surprised we have a problem in that area. John Chambers CEO and chairman of Cisco systems' John I appreciate everything. Except for the Virginia Tech comments that a tough year for us Hokies I appreciate the aisle and if Obama seems to have Brad and you not let you have you -- that thank you John take."