Network management Toolkit

Cisco: Success isn't just about networking

Charles Cooper and Marguerite Reardon CNET News

Published: 18 Apr 2005 18:35 BST

Does Cisco CEO John Chambers know something about his company that continues to elude most of Wall Street?

Given the investment community's propensity for herd behaviour, Cisco may be one of the most underestimated big-name technology stocks out there. The networking giant finished last week trading near its 52-week low, even though it continues to rack up record sales and earnings.

But after living through the go-go days of the bubble and the desperation of the post-dot-com recession, Chambers remains convinced about the best way to manage the company through good and bad.

Taking his managerial cue from former General Electric CEO Jack Welch, Chambers, who took over as chief executive in 1995, has been at the helm as Cisco's annual revenue has soared from $1.2bn (£630m) to its current run rate of close to $24bn.

Chambers recently sat down with CNET reporters and editors to talk about his management philosophy as well as his plans for steering Cisco through the latest round of consolidation in the technology industry.

Q: Cisco keeps talking about being a growth company, but shareholders haven't been as impressed. The company hasn't grown the way they would have hoped. How do you address those concerns?
A: It's hard to grow faster than your segment of the industry. Yet, year in and year out, we've grown faster than our segment of the industry in each category.

We've been growing pretty consistently in terms of our orders, and we think we will grow at 10 percent to 15 percent. Our order rate has been in that range for the last six quarters in a row.

But Cisco isn't that little scrappy start-up anymore, is it?
No. But if you look at it mathematically, we have six advanced technologies, which we've gone into, where we lead. To the best of my knowledge, there has never been a major IT company that is the leader in more than one or two product areas. Each time we move into the market, we become the number one player, almost without exception. That has never been done before.

If we were a start-up with those types of growth numbers, with three of these groups approaching the billion-dollar-a-year run rate, the stock would be a different value. So that's pretty good.