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Cisco CEO John Chambers on the company’s earnings, growth outlook and the challenges companies face from state and federal government.
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-- -- CEO this is exactly what you want to happen in the wake of your earnings.
For not one.
But five analysts at least to raise your stock's price target the numbers are that -- that's exactly what happened -- Cisco after the networking giant beat estimates.
They may have cut jobs that Cisco is still the largest employer in Silicon Valley and it is -- Dow components so there's a good chance that it's somewhere in your portfolio joining us now from San Jose California.
John Chambers chairman and CEO of Cisco good to see you mr.
chambers I guess you'd also want the stock to be higher which it was after the hour session but.
You when you reported -- -- today it's slightly down I'm -- it for because of weight more interested in a lot of what you talked about of that was that you have product sales of 10%.
But you kept your costs down so your margins came up.
Is Sysco -- transformed company.
Well this if you call me John we've known each other for many years I was good -- -- the World Economic Forum last month and did I if you look what Cisco does very will always we -- market transitions.
We've done this five or six times over the last twenty years we've emerged from each one -- dramatically stronger.
It appears that we're doing the same thing again -- time that we're growing with record revenues of 11% growth eleven point five billion.
Profits in terms.
Earnings per share up 48%.
And gaining market share vs most of our peers in the crowd as she said we're growing at 90% plus in a market that's going -- probably about 20%.
In areas such as our routing and switching while that may not be exciting GO audience think government the intelligent traffic signals of the Internet.
We gained share in both in we improved our margins so most people are given -- pretty good grades FX heating in terms of a turnaround.
-- we've done this before and we're positioned ourselves well for the future -- so very solid quarter but we have a long ways to go well -- -- our progress what.
It surprised me that you say that because you've always been like that in fact when you took over the company in the ninety's he took it from a 1000000002 -- forty billion -- it just went on and on how you've been able to grow this company.
A stumbling blocks no doubt at least along the way but you look at of course although Silicon Valley companies.
-- -- now is your public sector business and here in the United States we see government certainly.
Pulling back on a lot of their contracts.
What other country are you aiming for now -- you say that is rich territory for us at Cisco.
Well there is -- Lou about 20% of our business is public sector.
But just like Cisco I would argue the public sector got a way too fat.
And needs to take not an inch off the waistline -- -- five inches so actually think it's good for our country to be cutting back and public sector spending.
Having said that what will do -- move to where the public sector spending is growing.
The -- that you talked about social networking which we call collaboration.
Per basic video video everywhere to any device saving on travel cost driving productivity.
So we're looking on a global basis pretty well but it's more about profit.
Sector in terms of the growth there.
We grew search matters by 12% enterprise -- seven commercial by seven.
In the US our commercial grew by 13%.
So a lot of things you look for an economy are starting to slowly get a little bit better -- the eyes of most of our customers.
Well you know and there's also the bandwidth demand that incredible thirst for man with the costs of social networking -- the Netflix world.
Do you look at that and say.
That's our opportunity to expand the band with right now I'm -- what are the demands that you see I guess if you were to superimpose it over what we had back in 2000.
Well in 2000 is to put in perspective ways we build a high -- -- Eighty intelligent box if you will that would handle a billion phone calls.
And everybody said well -- yourself seven -- -- that -- seven billion people in the world we sold 6000 of them -- I think customers.
We now I don't pay high and -- that -- a billion videos and not used that -- gonna see an instant replay if we excuse right.
And so what you're seeing is video everywhere to every device not just a social networking but how we do collaboration.
How we do communications is a whole so it's one of Arafat targeted areas that this last.
A quarter alone and in search -- grew about 23%.
You're doing better certainly.
The state of California where you are -- is doing better they're always alarm bells when it comes to California everybody wants to beat up on my home state John -- really annoys me but.
I stand by California but are things getting slightly better and I'm talking about obviously dysfunctional legislature.
And the and the government there certainly but -- do you see signs that things are getting better in the state of California.
I think you're beginning to see things -- that may surprise you.
California has a long way to get as you know it's one of the worst states in the nation.
To do business and and to locate your your location but if -- really latch on can be always kept your headquarters there.
Will we've done the same thing in the US we've grown our headcount in Silicon Valley and we're one of the few major high tech companies is still had the majority of our employees in America.
I'm a loyal American on the loyal Californian.
But we must change and what I found erratically as this when you and -- toward economic -- Here our country is following in some ways Europe and yet Europe has realise things have changed the last decade.
Politics determine the economy.
Now this next decade economy were -- politics and say you have the leaders the chancellor.
A Germany.
The prime minister of the UK and you see the same thing our northern border the prime minister of Canada sourcing and how this business in government work together business nastase who hold accountable.
But how -- we generate jobs together and I think this is something both California.
And -- our nation as a whole must do it would dramatically better job on.
I wanna stay in California I want to stay in this country I wanna grow here.
But we have to -- make some changes and in business and government is not.
Where can -- -- -- -- as the number one change if you have president Obama's ear that you would say do this and it'll make it -- so like so much easier.
For business and and your tax rate is it's that 20% I saw that so.
Let's move from the tax discussion but as we finish up what's the number one thing aside from that.
That should be done to help businesses hire more people from a government perspective.
Well if you look at the growth -- Acosta Mary -- it's a great tension in the world.
Is small businesses you've got to make it easier for small businesses to add people to be available to incorporate to do out years.
China.
Ten years ago had 15 the number -- IPOs that America does they were doing about a hundred are 500.
Its initial public offerings are now achievers could -- -- about a hundred day do you 500.
We've got to make it easier for small business second in this actually in America -- 33% taxes.
And so -- -- very focused as a company paying our fair share we pay almost 1%.
A total corporate tax in America and income even there will we have about 40000 people in the US so.
We have no problem with paying our fair share.
Second thing I think the government has to do.
We have to say I was business and government work together to solve the problems not work at each other and not be critical of each other that say we must solve that.
And I think whoever -- this country a year from now must do more effective job than we are today.
John Chambers I will call you John I have -- -- long time to speculate trying to be --
