Rick Justice, Senior Vice President, Worldwide Field Operations, Discusses Cisco's New Geographic Theatre Structure

June 6, 2005

Cisco Systems announced several organizational changes that align the company's focus on long-term growth, capturing emerging market opportunities, and better serving its customers. The new geographic field organization structure includes an "Emerging Markets" theatre, a "European Markets" theatre and a "United States and Canada" theatre. (Geographic Theatre Structure Map) In the following Q&A, Rick Justice provides further insight into these changes.

Why did you restructure the Worldwide Field organization?

Rick Justice: It's all about growth. For the past seven consecutive quarters, bookings have grown in the mid-teens and above year-over-year. To capitalize on this momentum, we are aligning the EMEA, Americas International and US theatres around established markets and emerging markets with the idea that this newly created theatre will bring together common disciplines and programs for regions which are now aggressively investing in new networking capabilities. In addition, we are continuing to enhance coverage with our initiative to hire account managers and systems engineers on a global basis.

What executive changes are being made as a result of this reorganization?

Rick Justice: With the new geographic structure, I have reorganized my leadership team to align with the new theatres. We have a very talented group of leaders within the field sales team and being able to move these leaders to different roles within the organization speaks to their ability to play multiple positions. I believe this is a career development opportunity for each of these leaders. Specifically, the changes include:

• Senior Vice President Paul Mountford will lead the newly created Emerging Markets Theatre, which includes Latin America and the Caribbean, the Middle East and Africa, Russia and Commonwealth of Independent States (CIS), and Eastern Europe.
• Senior Vice President Chris Dedicoat will lead the newly created European Markets Theatre, which will include more than 20 countries, including the United Kingdom, Germany, France and Italy.
• Senior Vice President Rob Lloyd will lead the newly created U.S. and Canada Theatre.
• Senior Vice President Keith Goodwin will assume responsibility for leading the Worldwide Channels organization, which was previously run by Paul Mountford.

In addition, the Worldwide Customer Advocacy organization and Sales Support functions, including Sales Finance, Sales HR, Sales Legal and Cisco Capital will align around the new field structure.

(Worldwide Field Theatre & Channels Leadership Team)

Why did you create an "Emerging Markets" theatre?

Rick Justice: Based on current growth rates, several of the major emerging markets could become billion dollar markets for Cisco within next few years. If we invest now, we can create demand in our favor and accelerate growth for years to come. The Emerging Markets theatre was created to align regions that are now investing aggressively in new networking capabilities in order to apply the appropriate processes and resources to the unique needs of the emerging markets. Creating a theatre devoted to these markets will enable Cisco to satisfy unique local market requirements. By investing in these regions now, Cisco intends to shape demand and accelerate growth for years to come by delivering tailored, yet scaleable go-to-market models for the local markets.

Is this a strategy shift for Cisco's field organization?

Rick Justice: Cisco's field sales strategy remains the same-to capitalize on the current momentum. In fact, this restructuring of theatres enables us to better execute on our strategy to focus on long term growth and capturing market opportunities. While the traditional markets continue to drive significant growth for Cisco, the company continues to look for additional growth opportunities in emerging markets. We will continue to enhance our coverage with our initiative to hire account managers and systems engineers on a global basis.

Over the past eight quarters, our balance across all major geographies has been one of Cisco's greatest strengths-with 54% of the company's total product bookings from international markets. While the traditional markets continue to drive significant growth for Cisco, the reorganization will enable us to apply the appropriate focus and go-to-market strategies and resources for emerging markets too.

What does this mean for customers?

Rick Justice: This is excellent news for customers. The reorganization allows us to best align our resources to provide more focus and coverage on our customers by geography and market segment. In addition, we will continue to aggressively hire account managers and systems engineers in order to provide better coverage for customers in every theatre. From a business perspective, we expect virtually no disruption for customers or partners as we transition to this new Field structure. The timing of this organizational change allows us to start the next fiscal year with our leaders in place and positions us to invest in the first half to drive increasing momentum throughout the year.

How will this affect Cisco's quarterly theatre reporting? When will you begin the new reporting?

Rick Justice: We will continue to report revenue by geographic theatre in our quarterly financial results. The new geographic theatre structure will be reflected in our Q1FY06 financial results.

Will you reclassify these theatre breakouts for quarters past for comparison reasons?

Rick Justice: We do intend to provide a reclassification of revenue by theatre in order to provide investors with consistent comparisons. We will provide more details about this on our Q4FY05 conference call scheduled for August 9, 2005.