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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 and -- and good to chat with -- again sir thanks very much for coming on.
It's a -- 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 you you're gonna bring it up -- -- -- Italian -- gonna go an entirely different direction now I'm getting John you know.
-- -- -- -- -- -- So we're we're Brothers and then -- -- lets you really hit more hurts -- are your sales.
Doing better than my Hokies and -- 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 two economic recovery as a country and around the world they're obviously some major hurdles in front of us.
Battle that's how we talk several quarters ago we said first quarter this year what felt like a bottom to us.
We said the court that followed bad felt like it was a good upturn in it was -- tipping point the market.
In this quarter really added -- to that we sold good.
Acceleration sequential quarter Q4 two Q1 forest.
That was one of the best we've seen in five -- six years in it was a -- all aspects in the US.
In pretty good around the world a major turnaround vs what we've seen just six months before.
John it's 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 the emerging markets.
It's an area probably we need to be a little bit more aggressive again.
But our gross margins were the best they were in four years -- 66 point 3% from a financial point of view it's about -- solid quarters you get.
Our financial model all operating income as a percentage of revenues back to normal mode -- -- 9% which is world class.
And we -- good balance and almost every financial management that we have.
-- use to test 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 wanna make they can give us a clue who.
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 to 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 whether it's in collaboration whether it's in video.
You saw Steve for acquisitions in the last month and that we speaks to our organization structure built around -- -- teams.
Able to do one or two things not like command to control.
Environment that -- being able to do a half dozen things in the same month so if we do our job right and you take -- passed for three to five years out.
I believe our -- should be in the mid teens twelve to 17% with all the appropriate caveats.
That's what I think Brad you -- to hold me accountable for we do these interviews in the future.
And I think what you're seeing is that fans and our most recent quarters indicate we're getting back to normal great time periods.
Still some challenges and benefits and job creation -- still some steps the government could either help or are perhaps slow us down on.
But I think the numbers undeniable they've been very solid multiple quarters in -- -- An Aerospatiale -- a -- is the US.
The US in large enterprise companies -- -- into a slowdown and we said it in your show back in August of 2007.
They are now starting to turn up they -- -- minus 20% growth just one quarter got to 10% growth this quarter we -- similar improvement servers routers which were down.
30% year over year just one quarter ago this quarter they were down -- mid single digits so it feels pretty good in terms the recovery although there's still some challenges in front.
John that one of the acquisitions that you announced -- yet to be -- the -- and -- the video conferencing.
Company what are you seeing the demand from your customers.
For video conferencing or are you trying to get them on board with that with this acquisition.
We you know vegan it's interesting whether it's -- telepresence which whether it's United Nations Secretary General.
Or government leads around the world or CEOs like JPMorgan Chase or.
Business leaders understand that not only will communication change forever through these type of products.
But also their business models how they bring their workers to where the work -- as opposed to.
Having to travel.
Like they did in the past.
So you beginning to see video baby killer application just a quarter ago we announced the acquisition.
The flip which is probably in many.
Cam -- of the Internet with networking capabilities and -- back to take pictures of our West Virginia team and Virginia Tech game and exchange him over the Internet.
And I do think it will be the killer application.
It's 830 billion dollar market so while camber 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.
-- 500 million and travel for Cisco 500 million a year.
-- but it -- changes our business model and if there's one area that is a killer app for the future in terms of productivity and communications it's Padilla.
John wanna bring up one your neighbors there Intel yesterday smack of an antitrust lawsuit -- your attorney general Andrew Cuomo.
Obviously maybe sending a signal about -- you guys are are huge here 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 -- Cisco's -- competitors.
You have very strong -- like HP Microsoft has often competitor.
IBM at times to compete and partner.
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 -- heading.
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 -- -- far from perfect leader we do pretty well in this area -- and 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 and if Obama seems to -- Brad and you know I love your of these CNET that thank you John take.
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