Consumer Electronics

Cisco Analyst Day: Chambers Outlines Challenge & Opportunity (CSCO, EMC, VMW, HPQ, COMS)

Cisco Systems Inc. (NASDAQ: CSCO) is hosting its analyst day today, and we have been listening to comments and reviewing some of the data at its slide show.  CEO John Chambers is effectively confirming what many investors have suspected, and confirming what competitors and unrelated technology companies have feared for years.  The company is outlining its goals of becoming a one-stop information technology shop.

Chambers said, “I’m the most comfortable I’ve ever been with Cisco” and is looking to get back to 12% to 17% as the revenue growth figure, and he noted that mid-point benchmark would be a “B” on a report card.  He is also comfortable with the growth of market share  in the core routing and switching operations.  An avenue left open was spending money to gain market share, followed by a challenge over who else is better at making acquisitions.  It noted Flip, WebEx, and other core integrations.

As far as becoming a one-stop IT shop, Chambers noted that Cisco is almost always successful when it enters new markets.  Keeping managers and talent of former acquisitions is key to success there for Cisco.  While this is a definite gradual approach to getting into the backyard of Hewlett-Packard Co. (NYSE: HPQ), the fresh partnership with EMC Corp. (NYSE: EMC) and VMWare Inc. (NYSE: VMW) has been one where it hit the ground running.

The company is about to move on to the presentation with Ned Hooper, SVP & Chief Strategy Officer from 12:15 PM EST to 2:15 PM EST.  The most interesting notes ahead will come from 4:00 PM EST with Rob Lloyd, EVP Of worldwide operations for the “Global Sales Opportunity” and then at 4:45 PM EST with CFO Frank Calderoni discussing “Delivering Profitable Growth.”

We’ll be on later with key updates if anything earth shattering comes on.  As far as how Cisco will be going into the H-P space with its new giant tech venture, all you have to do is look at the implications of the 3Com Corporation (NASDAQ: COMS) acquisition.  Cisco is jumping into H-P’s space with servers and with EMC in storage, so H-P is jumping more into switching and routing.

On a personal note, getting this sort of growth year in and year out will not be an easy goal as the law of large numbers and a maxing out in economies of scale come into play.

Jon C. Ogg
December 8, 2009