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Cisco CEO on Signs of Growth in U.S. Business

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    Cisco CEO John Chambers on the company’s outlook in the U.S. and overseas.

  • Duration 6:25
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Technology giant and Dow component on my that's a lot of you may on this in your portfolio somewhere Cisco reported earnings another strong quarter.

Investors so at the moment let's take a look not exactly impress okay so down just under -- percent now it's about a percent at the moment fluctuating here.

So what are they focusing on perhaps perhaps on the outlook where growth may be in question for Cisco particularly overseas but let's clear that up right now -- the real story.

John Chambers Cisco chairman and CEO joining me live now from San Jose California.

To to talk about where the business is headed -- John thank you for being here and and let's get to it.

Liz thank you it's a pleasure to be on your show again and go ahead I'll follow you wherever you get global let me go right now to the brought the router and -- get court business the routers and switches okay what what jumped out of me was that routers were down 6% routers and switches are about 47% of your.

Total revenue tell me why -- shouldn't be worried about that.

OK so let me start with just a little bit of background is this was our -- quarter a row of record revenues.

We exceeded expectation in terms -- profitability and gross margins have very stable gross margins which people are concerned about.

One to two years ago when you -- -- you and I were talking before.

And we also are the number one player in search of out of our long way which is where movements routers -- The search matter market tends to be a little bit lumpy big order oriented.

This is a market that I think almost everyone -- we lead and while we have competition that's good there are architecture player's -- Also if you can grow at 5% in this market with Europe -- struggling tremendously US federal government down except church.

Like Warren said in the interview before about the -- yes that was one of the best interviews I've seen in action yes I am kissing up it was true that's.

It was easy when you're number one in each market you have no place to -- when there's a challenged.

And so we tend to be affected and to be a dirty dollar whether -- both ups and downs.

And that leads to the positive side.

What's going well for Cisco we're in the major market transitions what you hear about cloud.

Their virtual data center if you will we grew 65%.

Mobility is what brings all these technologists in light.

We grew wireless -- -- 27%.

Video we grew about 20%.

And we solve very -- but probably very good sides in the US.

That the US enterprise business and US commercial business growing at 9%.

Those are using indications two to four quarters -- of GDP changes assuming the government doesn't do anything to mess this up on this.

We even -- our emerging markets begin to level out and I realize I'm probably the exception in this.

We solve segments of Europe and think of -- not as one group.

-- they candidates central northern well Southern Europe and eastern.

We -- Germany Northern Europe UK start to stabilize.

230 call a trend but we'd like what we saw -- -- -- Our rate of -- in those markets started to slow dramatically in this last quarter so a lot of very positive things -- Our problem -- not be growth opportunities it's more macro driven in our opinion I think most -- shareholders would agree with that.

It out and John electricity if I could -- -- so I think.

Sure if I jump in a bit about the macro picture and end here in the US sequestration.

Meaning the real cuts are going to be hitting probably march 1.

I don't know about you I I don't see a solution here at this point.

How would that affect -- because some of your obviously you mentioned government spending.

That would might be affected by that what are you anticipating have you modeled for this and what of those models show you.

Well we have modeled Ford.

We would I characterize that as a potential pause not just in government spending in the market may get a little bit concerned.

But our trend here is off of unfortunately a very low base in terms of GDP growth most of my CEO counterparts -- the US GDP at one and a half percent.

Current growth levels give or take a half percent and only take -- half percent.

So we would assume that if this did hid in might cause a temporary pause but we think the trend is slowly up into the right.

And we're seeing that in our our key customer businesses which are usually a very good indication it could cause a temporary -- but -- think that's what it will be let -- okay.

That's good enough for me I'm glad that you mentioned that because I think a lot of investors wanted to know that we just showed a stock chart the last three months have been gorgeous.

Boy -- a lot of people wish they either got in in August or if not then December.

-- done extraordinarily well real signs of of activity here China let me get your final thought on this because China saw negative growth this quarter which you believe might last for a for a bit of time here what's your plan to win the Chinese.

Customer back is that doable in what is still a a I don't know -- -- market out of closed market but one that tends to be tweaked a bit by government forces.

All right I've been doing business in China for 27 years I did the first technology joint venture there.

We have a very good relationships with the people in China.

In China is one of five targeted emerging markets force that.

Represent about timbers and our current business that could represented 20% of our business looking out three or four years.

Specific -- China at this -- little bit to do.

With our activity vs whatever key competitors in -- navigate through that -- Anybody that thinks the Chinese economy is going to slow down.

They are remarkably efficient and there's no way they're gonna have new leadership -- -- and not -- economy at least seven to 9%.

So we if you look at the latter half of this year.

I think you will see -- come back we're good we're -- but we also partner to achieve key areas such as health care education.

Job creation.

And -- -- good partner in India China Brazil Mexico even in Russia.

In ways that candidly RIT counterparts are not.

That's our opportunity to become the number Wenatchee company around the world that in just a number -- communications company.

John it's it's good to watch the developments and it's good to see your optimism and who cares -- the stock down 1% it's still very close to 52 week high so what I I agree with you get sometimes the media -- not have perspective so thank you for that.

John Chambers Cisco chairman and CEO see you next time we are.

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