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Cisco CEO expects a sunny future in dark times

Over the next 12 months John Chambers expects to propose a more clearly defined consumer business strategy

Cisco Systems CEO John Chambers predicts a sunny network communications future for his company despite the strong possibility of economic doom and gloom, particularly in the United States.

Chambers was speaking earlier this month to an assembled roundtable audience of international press, during the company’s Partner Summit 2008 in Honolulu, Hawaii and said Cisco (Nasdaq: CSCO) has, in fact, advanced as a company during previous difficult economic times.

“Cisco has gained market share in every economic downturn,” he told the gathered group. “It’s (a time) when you gain or lose market share. We’re going to be aggressive.”

The Cisco CEO said that the current weak American dollar may actually help the company to be more price-competitive in global markets. Chambers said he’s been aware for some time that the U.S. economy is headed for “a few tough quarters.”

Cisco will assert greater focus in a number of emerging markets as well as those where the company historically has had limited penetration. The consumer space is one example.

Chambers said that while Cisco has been in the consumer space for a few years, specifically with the acquisitions of small business and consumer LAN equipment company Linksys and set-top box maker Scientific Atlantic, it may be time to drive forward in a more clearly defined direction.

“I think we have to make a decision,” Chambers said in response to the question of what will be Cisco’s consumer play. “We have to decide whether we’ll be satisfied with (where we are with) modest 10 to 15 per cent annual growth, or whether we should look to do something much more aggressive. You can probably guess what I’m thinking we should do.”

Chambers said that over the next 12 months, he expects his executive team to propose a more clearly defined consumer business strategy. Current growth in the network communications-related consumer space is approximately 15 per cent annually, he said, adding that “I’d like to grow it faster.”

The Cisco CEO was also asked whether the company has shifted from its philosophy of growth and market entry through acquisitions to a more organic strategy of growth through home-grown development and start up seed funding.

“It would be the wrong assumption to think that we’ve moved away from acquisitions,” he said. “We don’t acquire competitors and we’re not a market consolidator. But you’ll continue to see us being very aggressive in other acquisitions.”The pace of acquisition might average up to 12 companies a year, Chambers said, adding that it could be more or less. However, another large-scale buy isn’t likely to happen, since as the CEO put it, “you’ll see us more disciplined in terms of making bigger bets in market size.”

Green IT will also be a priority for Cisco. Chambers named it among 22 priorities for the company this year, explaining there was a realization that Cisco has an obvious part to play in promoting green-IT principles given the company’s importance in computing architecture, and simply by the fact that going “green” is a socially responsible thing to do.

“When you do what’s socially right, it ends up being a good business decision,” he said. “[Green IT] is the right thing to do and it’s very good for business.”