https://www.youtube.com/watch?v=v8v3TRgNtgM - In this interview, Chuck Robbins, CEO of Cisco, discusses the company's strong quarterly performance and future outlook. Robbins expresses optimism, noting that Cisco has seen a return in demand and achieved record revenues and gross margins over the past two years. He highlights the company's successful acquisition of Splunk, emphasizing the benefits of increased scale and customer reach, with the integration progressing faster than expected.
Robbins also addresses the recent layoffs, clarifying that they were driven by the need for efficiency and reallocating resources to fast-growing markets, rather than cost-cutting measures. He mentions that some laid-off employees might be reassigned within the company if their skills match new roles. Robbins downplays the possibility of a broader layoff trend across industries and discusses the impact of AI on business functions, noting that Cisco is actively investing in AI technologies and partnerships to enhance its offerings.
Finally, Robbins touches on how Cisco's customers are upgrading their infrastructure in anticipation of AI-driven applications, reflecting a strong demand for the latest networking equipment.
Transcript:
0:00
AM SO THRILLED ABOUT THAT.
0:02
I DON'T KNOW.
0:02
I SHOULDN'T BE ROOTING.
0:04
I KNOW THAT THAT'S BUSH LEAGUE,
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BUT CHUCK ROBBINS REPORTED A
0:07
GOOD QUARTER AND IS OPTIMISTIC
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FOR CISCO.
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WE HAVE TO TOUCH ON THE LAYOFFS,
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OBVIOUSLY, BECAUSE A LOT OF
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PEOPLE YOU LAID OFF, BUT CHUCK,
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I HAVE TO TELL YOU, IT'S BEEN A
0:16
WHILE SINCE YOU JUST TOLD ME,
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YOU KNOW WHAT, THECUSTOMERS ARE
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BUYING.
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THEY NEED OUR STUFF, AND WE'RE
0:23
READY.
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THIS WAS YOU AT YOUR MOST
0:26
UPBEAT, CHUCK.
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YEAH, JIM, FIRST OF ALL,
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THANKS FOR HAVING ME.
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GOOD TO SEE YOU GUYS.
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YOU KNOW, IF YOU REALLY STEP
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BACK AND THINK ABOUT WHAT'S
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HAPPENED OVER THE LAST FOUR
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YEARS, IT'S REALLY HARD TO
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BELIEVE.
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BUT THIS PAST QUARTER IS WHEN WE
0:39
JUST EXITED THE OVERALL IMPACT
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FROM THE PANDEMIC, THE SUPPLY
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CHAIN SHOCK.
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WE WENT THROUGH THIS PHASE WHERE
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OUR CUSTOMERS WERE ABSORBING ALL
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THIS EQUIPMENT WE SHIPPED THEM
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AND WE FINALLY GOT THROUGH IT.
0:51
WE WERE TALKING ABOUT IT
0:52
YESTERDAY, AND IT'S HARD TO
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BELIEVE THIS THING HAS BEEN
0:55
GOING ON FOR FOUR YEARS.
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WE THOUGHT THAT WOULD END AT THE
0:59
END OF Q4, WHICH IT DID, AND THE
1:02
ORDER GROWTH WAS GREAT.
1:02
WE SAW THE DEMAND RETURN, WE SAW
1:05
IT ACROSS THE BOARD.
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AND IF YOU LOOK AT THE LAST TWO
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YEARS, THE LAST GO YEARS FROM A
1:08
REVENUE PERSPECTIVE HAVE BEEN
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THE TWO HIGHEST YEARS OF REVENUE
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WE HAVE HAD IN THE HISTORY OF
1:12
THE COMPANY.
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WE HAD OUR BEST GROSS MARGINS
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EVER DURING THE QUARTER.
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WE HAD THE HIGHEST SEQUENTIAL
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ORDER GROWTH FROM Q3 TO Q4.
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WE'VE SEEN IT OVER 20 YEARS.
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IT WAS PRETTY SOLID.
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THERE WERE PEOPLE WHO TOLD
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ME, CHUCK MADE A MISTAKE BUYING
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SPLUNK.
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I HAPPEN TO HAVE LOVE THE CEO OF
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SPLUNK, I HAPPEN TO LOVE WHAT
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HE'S DOING, AND I SAID, I THINK
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THIS IS ONE OF THE GREATEST
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ACQUISITIONS BECAUSE SECURITY IS
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REALLY IMPORTANT, BUT MORE
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IMPORTANTLY, THEY WERE NOT ABLE
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TO GET ENOUGH.
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THEY NEEDED MORE SCALE, AND YOU
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GAVE THEM SCALE.
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THIS SPLUNK ACQUISITION, WELL
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AHEAD OF WHERE YOU THOUGHT AT
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THIS POINT.
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IT IS AHEAD, AND YOU'RE
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RIGHT.
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A LOT OF THE THINGS THAT WE
1:46
BRING TO THEM, NUMBER ONE, IS
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SCALE OF CUSTOMER REACH.
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THEY WERE VERY CONCENTRATED IN A
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CERTAIN SET OF CUSTOMERS.
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GEOGRAPHICALLY, PROVIDING
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INTERNATIONAL REACH.
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THE PARTNERED COMMUNITY THAT WE
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HAVE THAT THEY REALLY HADN'T
1:58
ESTABLISHED, SO WE HAVE ALL OF
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THOSE OPPORTUNITIES, AND WE SAW
2:02
DURING THE QUARTER, WE SAW
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ROUGHLY TEN DEALS THAT WE HAVE
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NOW CLOSED WITH THE TEAMS
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WORKING TOGETHER, AND IT'S ONLY
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FOUR MONTHS IN.
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YOU GOT TO REMEMBER, WE DIDN'T
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EVEN EXPECT TO CLOSE THIS DEAL
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UNTIL SEPTEMBER, AND WE CLOSED
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IT IN MARCH, EFARLY, SO IT'S
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RUNNING AHEAD OF WHERE WE
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THOUGHT.
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ONE LAST QUESTION BEFORE WE
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GIVE IT UP TO EVERYBODY.
2:20
I WAS NOT SHOCKED THAT YOU HAD
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TO LAY OFF PEOPLE.
2:23
YOU MADE A GIANT ACQUISITION.
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YOU DON'T NEED THREE PEOPLE
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COVERING ONE ACCOUNT.
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THIS WAS NOT A SIGN OF WEAKNESS.
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I THOUGHT IT WAS DONE OUT OF --
2:30
NO ONE WANTS TO LOSE THEIR JOB,
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AND YOU DON'T LIKE TO LAY OFF
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PEOPLE BUT IT WAS DONE OUT OF
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STRENGTH, NOT WEAKNESS.
2:40
THIS IS ABOUT INVESTMENTS IN
2:42
EFFICIENCY.
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AS I SAID ON THE CALL, WE
2:43
SHIFTED HUNDREDS OF MILLIONS OF
2:45
DOLLARS INTO THESE FAST-MOVING
2:46
MARKETS.
2:46
IF YOU LOOK AT WHAT'S HAPPENING
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IN THE WEB SCALE SPACE WITH
2:50
THEIR DEMANDS, EVERY CUSTOMER
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HAS A DIFFERENT SET OF FEATURES
2:54
THEY WANT.
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EVERY CUSTOMER WANTS A DIFFERENT
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SILICON TO BE DESIGNED, SO WE
2:58
HAD TO INVEST MORE IN SILICON TO
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RUN PARALLEL PATH DEVELOPMENT.
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WE'VE HAD TO INVEST MORE IN
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SOFTWARE DEVELOPMENT FOR THE
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DIFFERENT FEATURES THAT EACH ONE
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MIGHT WANT.
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WE'RE WORKING ON THE NVIDIA
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SOLUTION THAT YOU TALKED ABOUT
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EARLIER THAT'S NOT IN MARKET
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YET.
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CYBERSECURITY STUFF THAT I SAID
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THREE QUARTERS AGO WAS GOING TO
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RAMP IN THE SECOND HALF.
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WE SAW HIGH SINGLE-DIGIT GROWTH
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IN Q3, DOUBLE-DIGIT ORDER GROWTH
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IN Q4.
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THAT'S WITHOUT SPLUNK.
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AND IN '25, IT'S GOING TO KICK
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IN, AND I THINK IT'S HAPPENING
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THE WAY WE EXPECTED, AND
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SECURITY WAS STRONG.
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RIGHT NOW, WE FEEL LIKE WE'RE
3:31
PAST THE PAIN POINTS THAT WE'VE
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EXPERIENCED, AND DEMAND SHOULD
3:35
BE NORMALIZING.
3:36
YOU DON'T THINK THERE THEREBY
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FU
3:40
- WILL BE FUTURE LAYOFFS?
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IT'S HARD TO SAY THAT WOULD
3:43
HAPPEN IN THE FUTURE BUT THAT
3:44
WOULD BE OUR INTENT AND OUR
3:45
DESIRE.
3:45
YOU TALKED ABOUT IT AS A
3:49
REALLOCATION AS OPPOSED TO
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REALLY BEING DRIVEN BY COST
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SAVINGS.
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THAT'S WHAT YOU SAID ON THE
3:52
CALL.
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I'M CURIOUS, IF YOU CAN SORT OF
3:53
GIVE US MORE SENSE THERE.
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CONCEIVABLY, YOU COULD
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REALLOCATE MANPOWER WITHOUT
3:58
LAYING THEM OFF, COULDN'T YOU?
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WE WILL DO THAT.
4:01
WE HAVE A WHOLE PROCESS THAT
4:02
WE'LL GO THROUGH WHERE WE'LL DO
4:04
SKILLS MATCHING.
4:05
SOME OF THESE PEOPLE THAT ARE IN
4:07
THAT 7% WON'T LEAVE THE COMPANY.
4:08
THEY'LL BE -- THEY WILL MOVE
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INTO SOME OF THESE ROLES IF THE
4:11
SKILLS MATCH.
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WE'VE BUILT THIS PROCESS OVER
4:13
THE LAST SEVEN, EIGHT YEARS TO
4:16
TRY TO MAKE SURE WE'RE DOING
4:17
THAT, SO THAT IS THE INTENT.
4:18
YOU'RE CHAIR OF THE BUSINESS
4:19
ROUND TABLE, YES?
4:20
YES.
4:20
YOU TALK TO EVERYBODY WITH
4:23
PRETTY HIGH FREQUENCY.
4:24
DO YOU THINK WE'RE ON THE CUSP
4:24
OF SOME BROADER LAYOFF TREND,
4:26
OUR CYCLE?
4:27
I DON'T THINK SO.
4:29
I DON'T THINK SO.
4:30
I THINK THAT, YOU KNOW, THE BIG
4:32
QUESTION THAT WE TALK ABOUT
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GOING INTO THIS IS, IS EVERYBODY
4:36
GOING TO THINK THIS IS
4:37
A.I.-DRIVEN?
4:38
I DO THINK THE G&A FUNCTIONS CAN
4:40
BECOME MORE EFFICIENT.
4:41
YOU CAN USE THAT USING
4:42
AUTOMATION SYSTEMS.
4:43
THERE IS AN ASPECT OF A.I. THAT
4:44
WILL GO INTO THAT, BUT I DON'T
4:46
THINK THIS IS A SIGN OF A BIGGER
4:48
TREND.
4:49
YOU TALK ABOUT CUSTOMERS
4:50
UPGRADING FOR A.I., AND YOU
4:53
BECOMING A BENEFICIARY.
4:54
I'M WONDERING IF YOU CAN
4:56
EXPLAIN, WHEN YOU SAY THEY'RE
4:58
SETTING ASIDE MONEY FOR A.I. TO
5:00
MODERNIZE INFRASTRUCTURE, WHAT
5:01
DOES THAT TRANSLATE TO WHEN YOU
5:03
MODERNIZE YOUR INFRASTRUCTURE
5:03
FOR CISCO?
5:04
WE HEARD THIS FOR THE FIRST
5:06
TIME THIS QUARTER.
5:07
WE HAD CUSTOMERS TELLING US THEY
5:08
WERE ACTUALLY UPGRADING THEIR --
5:11
THEY'RE SWITCHING
5:12
INFRASTRUCTURE, THEIR ENTERPRISE
5:14
ROUTING INFRASTRUCTURE, THE DATA
5:15
POINTS WE GAVE ON THE CALL, HIGH
5:19
SINGLE-DIGIT GROWTH ON
5:21
ENTERPRISE SWITCHING, SBRENTERPE
5:23
ROUTING, MILLION DOLLAR ORDERS
5:25
IN WIRELESS, UP 20% YEAR OVER
5:26
YEAR, SO THEY'RE JUST
5:26
BASICALLY -- THEY KNOW THAT WHEN
5:28
THEY BUILD THESE APPLICATIONS,
5:29
THEY'RE UNCLEAR ABOUT WHAT THE
5:31
TRAFFIC FLOWS WILL BE OR WHAT
5:34
THE TRAFFIC DEMANDS WILL BE, BUT
5:35
THEY'RE PRETTY CONVINCED THAT
5:37
WHATEVER HAPPENS, I NEED TO HAVE
5:38
THE LATEST AND GREATEST
5:40
EQUIPMENT IN MY INFRASTRUCTURE.
5:41
I'VE BEEN ASKING ALL CEOs
5:43
THIS QUESTION.
5:45
WHAT -- WHICH ONE DO YOU USE?
5:47
ARE YOU ON META?
5:47
ARE YOU ON CLAUDE?
5:49
DO YOU USE GEMINI?
5:51
CHATGPT?
5:51
HOW OFTEN DO YOU USE THEM?
5:53
OH, WELL, WE -- IF YOU LOOK
5:56
AT WHAT WE'VE DONE, WE ACTUALLY
5:57
ARE USING A LOT OF DIFFERENT
6:00
ONES.
6:01
WE HAVE -- WE CREATED THIS
6:02
BILLION DOLLAR A.I. INVESTMENT
6:03
FUND, AND ONE OF THE THINGS THAT
6:05
WE DID DIFFERENTLY IS IN
6:06
ADDITION TO INVESTING IN SOME OF
6:08
THESE PLAYERS, WE ALSO WANTED TO
6:09
BUILD STRATEGIC PARTNERSHIPS
6:10
WITH THEM, SO WE LOOKED AT THEM
6:12
AND SAID, WHAT IS YOUR UNIQUE
6:14
DIFFERENTIATION THAT WE CAN
6:16
ACTUALLY GO?
6:17
SOME OF THEM MIGHT BE BETTER AT
6:18
HELPING US RUN LANGUAGE MODELS
6:20
THAT APPLY REALLY DEEPLY INTO
6:21
CUSTOMER SERVICE.
6:23
SO, WE HAVE INVESTMENTS AND
6:25
PARTNERSHIPS WITH MISTRAL, WITH
6:28
COHERE, WITH OPENAI...