CFO Q&A FORUM: Larry Carter discusses Cisco's Q4 and FY 2001 Fiscal Results
August 7, 2001
How would you characterize the quarter? Were you pleased with your results?
Larry Carter: While our revenues and profits were obviously not at the levels we'd like to see, we were pleased with other aspects of our financial position. We had a number of positive developments in terms of our growing financial strength and stability, cost controls, resource realignment, and gains in market share and customer wins. Cisco's ability to maintain a strong financial position provides the flexibility to make investments in technology development and operations that will provide for long-term success.
Having put a lot of difficult decisions behind us, our primary focus in the quarter was on customers, profit contribution and growth opportunities. In fact, we saw an increased customer confidence in Cisco, demonstrated by momentum with customer wins and market share gains. Most importantly, we feel we made the right decisions earlier in the year, and we are seeing the results this quarter.
Given the current market, does Cisco continue to believe it can grow 30-50 percent over the long term?
Larry Carter: We recognize there is a healthy debate about whether we can grow 15-20 percent or 30-50 percent. In the long-term, only time will tell if our industry grows between 10-20 percent or more than 30 percent. Our corporate focus is entirely on those variables that we can control. Our goals are to grow as fast as the market, with stretch goals for each business unit to grow faster than the market in each key product area; manage expenses very conservatively>we will not add expenses until we see growth; and take careful business risks and set aggressive stretch goals in everything from productivity, market share, financial strength, and leadership recruitment, to customer satisfaction. To illustrate our historical growth pattern, since Cisco went public in 1990, Cisco revenues have increased over 50 percent year-over-year in 10 of the last 12 years, and over 30 percent the past 12 years, with the exception of FY 2001.
What are the key industry growth drivers?
Larry Carter: Our industry's growth continues to be driven by the adoption of network-based applications such as e-learning, customer care and workforce optimization that combine data, voice and video. Growth is also being fueled by the development of key new technologies such as content networking, security, wireless LAN, etc. and the expansion of tornado markets, such as high-end routing, VoIP, content networking, optical and wireless, etc. The overall health of the economy is also a key driver of growth.
What is your outlook for the Internet?
Larry Carter: Despite the continued economic uncertainties and capital expenditure crunch, our long-term positive outlook for the industry and the role of the Internet as a key productivity tool has not changed. We believe IP is the future and Cisco is well positioned to help companies and service providers leverage the Internet for revenue growth. If we execute well, we expect to not only be one of the key companies in the industry consolidation, but to break away from our competitors.
