Good times? Cisco's hiring, and shoppingMay 13, 2010: 9:00 AM ET
Cisco is among the most important bellwethers in the tech economy, so all eyes were on CEO John Chambers when the networking giant released its earnings numbers Wednesday.
The news was good: revenue of $10.4 billion and non-GAAP earnings per share of 42 cents both beat even Wall Street's optimists, and Cisco (CSCO) raised guidance for the current quarter. Chambers called it the company's best quarter ever.
But some of the most interesting tidbits weren't in those numbers. In a chat with Fortune after the earnings release, Chambers said he's now planning to hire even more new workers based on encouraging economic signs. He's also determined to put Cisco's cash stash to work buying companies that fit with Cisco's vision. For anyone looking to land a job -- or sell a tech startup -- that should be welcome news. Below are some excerpts from our conversation:
Cisco's revenue has bounced back strongly. Also, you said you hired 1,000 people last quarter, on top of the people you added through acquisitions. What positions are you hiring for, what's the split between inside and outside the U.S., and what does this hiring say about your confidence?
The confidence is very good. We are hiring; the 2,000 to 3,000 number we said we'll hire over the next few quarters is probably conservative. The majority of our hiring is still in the U.S., although balance is good on a global basis. We're hiring in both sales and support on a global basis as you would expect, given that our business has turned up.
Our productivity was up 28% this last quarter, year-over-year. That's obviously too high. It's a great number and says our technology is doing a great job of driving that -- the telepresence, the videoconferencing, the new business models, but I think you will continue to see us accelerate that hiring. That certainly was our message today. It's a very good confidence indicator. Do I feel more optimistic today than I did a quarter ago? Absolutely, yes.
You said you aren't looking for the usual kind of 8-9% GDP bounce you might normally expect coming out of a recession like this. Why not?
I think what you've seen in this bounce-back is the problems were very severe going in. I do not see the aggressiveness on business investment that you would like to see. I do not see the normal confidence in hiring people that you would see in medium-sized businesses and large businesses. On the one hand, from a technology perspective, I think you are seeing across the board, consumption of technology is going to be very good. But you're not seeing the hiring.
Hewlett-Packard (HPQ) recently completed its 3Com acquisition, and they haven't been shy about saying they're gunning for you -- and your margins -- in networking. Is this challenge any different from the competition you've faced in the networking space all along?
Remember, we started out in the routing market. We moved into switching, and became the number-one switching player. We moved from enterprise into service providers, and most people thought we couldn't win there. We became the number-one player against great companies: Alcatel, Lucent (ALU), Nortel, Siemens, Ericsson just to name a few. We've taken on the giants before in the networking segment. So it's not a major difference at all. I think the key takeaway, however, is how fast we're growing in the data center and how well we've anticipated virtualization with the datacenter going toward the cloud. Those numbers were off the charts. Nobody's growing like that, in the industry.
You've got a lot of cash. And you mentioned on the call that the Tandberg acquisition was smooth. Should we take that to mean that you're still shopping?
Absolutely. I think you can assume that innovation, to us, hasn't changed. There's internal innovation of existing products, which I think you've got to give us an A to A+ on. We re-did almost every major internal routing and switching product in the last year, and they're all off to a good start. That's probably more than we could have hoped for, and they're doing extremely well. We have moved very well into our market adjacencies, and each of the 30 has acquisition opportunities on it.
So I think you will see us continue to see us do things between internal development of existing products, internal startups, acquisitions across all major product categories and all market adjacencies over time.