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pww.comCisco Systems, Inc. Presents at Barclays America Select Franchise Conference 2015, May-19-2015 11:10 AM - NasdaqGS:CSCO

NasdaqGS:CSCO

Christopher Dedicoat [Advisor of Office of the Chairman & CEO] 💬

Christopher Dedicoat, serving as the Advisor of the Office of the Chairman & CEO at Cisco Systems, Inc., presented at the Barclays America Select Franchise Conference in 2015. Below are the detailed points he covered during his presentation and subsequent Q&A session:

Key Points from Presentation:

  1. Strategy Overview:

    • Cisco has executed its strategy effectively.
    • The strategy focuses on delivering technology architectures rather than individual products.
    • Customers are interested in how Cisco can help them achieve their business outcomes.

  2. Internet of Things (IoT):

    • Companies are transitioning to the second generation of the internet.
    • There is a significant focus on digitizing businesses and leveraging IoT.

  3. Customer Focus:

    • Customers are seeking agility, better alignment between IT and business, increased automation, and enhanced security.

  4. Security Market:

    • Cisco experienced 14% growth in security in the latest quarter.
    • The security market is fragmented, presenting an opportunity for Cisco.
    • The network is considered the best platform for delivering security.

  5. Financial Performance:

    • The company met its commitments, growing profits faster than revenue.
    • Cisco returned over 50% of free cash flow to shareholders.

Q&A Session:

  1. Demand Picture:

    • Enterprise and Public Sector businesses grew by 7%.
    • Commercial business grew by 6%.
    • Service Provider business declined by 7% due to constrained capital expenditures (CapEx).

  2. Geographic Demand:

    • Emerging markets faced challenges, particularly in China and Russia.
    • Without China, Asia-Pacific would have grown by 8%.
    • Without Russia, Europe would have grown by over 4%.

  3. Product Area Demand:

    • Routing grew by 4%, switching by 6%, wireless by 9%, collaboration by 7%, security by 14%, and data center by 21%.
    • Data center business performed exceptionally well, with Cisco becoming the #1 in blade servers in the U.S. and #2 globally.

  4. Software-Defined Networking (SDN) and Network Functions Virtualization (NFV):

    • Cisco's approach to SDN, known as Application Centric Infrastructure (ACI), focuses on application-centric infrastructure.
    • The discussion around SDN has evolved to how to help customers migrate and automate their networks.

  5. InterCloud Strategy:

    • InterCloud addresses the challenges of managing multiple cloud providers and enhancing security.
    • It offers a seamless, interconnected cloud environment with 65 partners and approximately 350 data centers.

  6. Security Business Growth:

    • Cisco has a robust security portfolio, including acquisitions in areas such as email security, web security, and threat detection.
    • The goal is to create a security architecture involving the network, compute, storage, and real-time analytics.

  7. CEO Transition:

    • The transition to the new CEO, Chuck Robbins, is expected to involve minor tweaks to the current strategy.
    • The focus remains on adapting to major market shifts.

  8. Carrier Spending:

    • Recovery in carrier spending will come from increased share of wallet, particularly in the U.S. market.
    • Cisco aims to help service providers reduce operational expenditures (OpEx) and improve security.

  9. Nokia-Alcatel Merger:

    • The merger presents an opportunity for Cisco due to the complexity of integrating the two companies.

  10. Web Cloud Customer Base:

    • Cisco is well-positioned in the web cloud market with platforms like the 9K and ACI.
    • Security is a key differentiator in this market.

  11. Gross Margins:

    • Cisco aims to sustain gross margins through innovation and focusing on creating infrastructure for agile enterprises.
    • The company continues to develop its own Application-Specific Integrated Circuits (ASICs) for featuring capability.

  12. Operating Expense Structure:

    • Cost containment programs have helped control OpEx.
    • Continued investment in Research and Development (R&D) is crucial for innovation and long-term success.

  13. Internet of Everything Opportunities:

    • Cisco is investing in the Internet of Everything, focusing on digitization in manufacturing and smart cities.
    • The network plays a critical role in processing data from IoT devices.

  14. M&A Agenda:

    • Cisco prefers smaller, technology-focused acquisitions that can be integrated quickly.
    • The company also invests in startups to gain early visibility into global innovations.

  15. Capital Allocation:

    • Cisco committed to returning over 50% of free cash flow to shareholders.
    • Future changes to capital allocation will be determined by the new CFO.

  16. Public Sector and Southern Europe:

    • Public sector spending was strong, with the U.S. federal space showing 24% growth.
    • Southern Europe showed high-teen growth over the last four quarters.

  17. Russia Sanctions Impact:

    • Removal of sanctions would likely result in an instant increase in Cisco’s business in Russia.

These points cover the key insights shared by Christopher Dedicoat during the conference.