SAN JOSE, Calif., August 23, 2001 - Further executing against its breakaway strategy and six-point business plan, Cisco Systems today announced several organizational changes that align the company's focus around changing customer requirements and emphasize the company's advantages as the communications market consolidates. These changes include moving from the company's existing line of business structure to centralized engineering and marketing organizations. The new engineering organization will focus on 11 new technology groups, while marketing will focus on communicating Cisco's unique technology differentiation.

"At the heart of this change are our customer requirements and our clear market transition opportunity. Our line of business structure has served us very well in the past, when customer segments and product requirements were very distinct. Today, the differences have blurred between these customer segments and Cisco is in a unique position to provide the industry's broadest family of products united under a consistent architecture designed to help our customers improve productivity and profitability," said John Chambers, president and chief executive officer of Cisco Systems. "We are making these changes at a time when we are beginning to see signs that our business is stabilizing. Although we can't predict the future, our orders for the first weeks of this quarter are in line with the expectations we discussed in our fourth quarter earnings call."

Cisco also announced several executive changes related to the new organizational structure. Mario Mazzola, an eight-year Cisco veteran and former senior vice president of Cisco's new business ventures group, has been named chief development officer. Reporting directly to Chambers, Mazzola will oversee the 11 new technology groups that comprise Cisco's entire engineering organization. Charlie Giancarlo, formerly senior vice president of the commercial line of business, will run four of these technology groups and report directly to Mazzola. Michelangelo Volpi, who has played a key role as chief strategy officer, will take on a new operational role at Cisco. He will be in charge of the largest technology area, Internet Switching and Services, reporting to Mazzola. James Richardson, formerly senior vice president of the enterprise line of business, will run Cisco's marketing organization as chief marketing officer, reporting to Chambers.

Kevin Kennedy, formerly senior vice president of the service provider line of business, will be leaving Cisco to pursue external opportunities. Moving forward, Kennedy will be an industry and technical advisor to Cisco. During his eight years of leadership at Cisco, Kennedy has been responsible for leading Cisco's strategy to take advantage of the time-division multiplexing (TDM)-to-packet revolution in the service provider sector.

Commenting on the executive changes, Chambers noted, "I am very excited about these leaders. This new structure brings us even closer to our customers, encourages teamwork and eliminates product and resource overlaps," said Chambers. "Good teamwork requires a single point of decision-making to effectively share resources and allocate them to profitable growth areas. I also want to thank Kevin for his insights into the new organizational structure, and also congratulate him and his team for their accomplishments in areas such as access routers, VoIP excellence, high availability, and competitive positioning, just to name a few. We will all deeply miss Kevin, although we look forward to working with him in his role as industry and technology advisor."

Eleven Technology Groups

Cisco's transition from its three lines of businesses-enterprise, service provider and commercial-allows the company to focus specifically on the following technology areas:

• Access
• Aggregation
• Cisco IOS. Technologies Division (ITD)
• Internet Switching and Services
• Ethernet Access
• Network Management Services
• Core Routing
• Optical
• Storage
• Voice
• Wireless

In 1997, Cisco organized around lines of business to address two major new market opportunities at that time: the service provider migration to IP services and the adoption of IP products by small and medium-sized businesses through channel distribution. The competitive landscape was characterized at that time by large service provider suppliers and by highly focused channel-oriented equipment suppliers. As evidenced by the dramatic growth achieved during Cisco's line of business structure-from $6.4 billion in fiscal year 1997 to $22.3 billion in fiscal year 2001-this organizational strategy allowed the company to become the recognized leader in enterprise and service provider markets.

For a questions and answer with John Chambers, and further information please go to http://newsroom.cisco.com