Cisco's Chambers sees hope after recession

The current recession is almost the opposite of the 2001 downturn for Cisco Systems because of permanent cost-cutting and the company's move into new technologies and markets, chairman and CEO John Chambers said Monday.

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The current recession is almost the opposite of the 2001 downturn for Cisco Systems because of permanent cost-cutting and the company's move into new technologies and markets, chairman and CEO John Chambers said Monday.

Revenue and profit for the technology bellwether fell in its latest quarterly results, announced earlier this month, but Chambers said at that time he saw some hints that the economy is bottoming out. He is also hopeful about Cisco's prospects when business picks up.

In 2001, when the telecommunications business crashed from the first Internet-fueled boom, Cisco was essentially a switch and router company, and the six advanced technologies it was developing - such as unified communications, security and optical - were several years from contributing to profit, Chambers told the JP Morgan Technology, Media and Telecom Conference, in Boston. The company cut about 25 percent of its expenses then, including layoffs.

Cisco is in much better shape today because 25 percent of its revenue now comes from its added technologies and the company is working on getting into 30 more new technologies and markets, Chambers said. The company also has more cash now, he pointed out: It had US$34 billion in cash in 2008, he said.

Rather than cutting and then rebuilding with the economy, the cuts Cisco is making today are almost all permanent, such as slashing travel expenses to $240 million per year from $750 million by using its own TelePresence systems for virtual meetings, Chambers said. The company expects to cut its annual costs by $1.5 billion this year.

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