Cisco upbeat about future

In a series of presentations here at its annual analyst conference, Cisco Systems this week detailed its plans for getting through the current economic storm.

CEO John Chambers admitted the company had made some missteps. "We got completely surprised" by the drop in sales early in the year, he said. "We thought we could power through this."

But after Cisco missed earnings expectations in its second fiscal quarter of 2001, the company started cutting its costs. Cisco laid off thousands of employees and is still reducing its staff through gradual attrition. In total, Cisco has cut its cost structure by more than 25 percent, said Rick Justice, senior vice president of worldwide field operations.

Chambers said the company could be doing better in its approach to incumbent local exchange carriers and said he hoped to increase Cisco's market share at least 10 percent among service providers over the next year.

To do that, Cisco will attempt to build up its relationships with service provider customers, said Bill Nuti, senior vice president of worldwide service provider operations. That means selling to the different groups within service providers, from the CEO to the engineering department to the procurement department, he said.

One area Cisco would like to expand into is optical networking, where Nortel is strong. Chambers said the current downturn is working in Cisco's favor, because the stalled optical market is hurting Nortel and improving Cisco's chance of success in that market.

Other areas Cisco will pursue heavily are storage networking and places where voice, data and video can be merged into one network.

Across the board, Cisco will rely heavily on the strength of its brand and its financial strength relative to its competitors, he said. "I would not underestimate the role of [vendors'] financial strength in the decision" about what equipment to buy, Chambers said.

The network equipment giant sees light at the end of the tunnel. "We are the optimists in this industry, and time will tell whether we are right or wrong on that," Chambers said.

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