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Cisco-The Human Network

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Caleigh Tully

on 17 October 2012

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Transcript of Cisco-The Human Network

In the late 1970s and early 80s, Stanford University was looking for a way to allow different types of computers to communicate with each other.
Leonard Bosack discovered a way to do this, connecting two computer labs on campus over 500 yards away. Stanford University was looking for a way to allow different types of computers to communicate with each other
Leonard Bosack discovered a way to do this, connecting two computer labs on campus over 500 yards away.
They called it Cisco Systems, an allusion to San Francisco, with their logo resembling the Golden Gate Bridge. Recognized potential
Attempted to sell to multiple companies None were interested They quit their jobs and founded their own company in December, 1984. Dispute with Stanford Early Years Background Founders Stanford gave Cisco the licensing for router software and two computer boards.
Gave Stanford $169,000, product discounts
Agreed to manage their internet for 3 years. Eventually came to an Agreement in 1987. Mo Moving Past Adversity Cisco’s sales began to take off after the Stanford dispute.
Began marketing their products towards universities, research centers, and government facilities. Cisco also targeted large corporations that were geographically diverse, and therefore needed a way to quickly share information across long distances.

This is still a large part of Cisco’s business today. Financial Trouble Cisco was short on cash in 1988.
Forced to turn to Sequoia Capital and Donald T. Valentine for financial support, which came at a steep price. John Morgridge was named new President and CEO.

Bosack was demoted to chief scientist and Lerner to head of customer support.

Lerner never saw eye to eye with Morgridge, and was fired in 1990. Bosack quit soon after. Morgridge was responsible for making Cisco more successful than Bosack and Lerner ever could have imagined. This vision is embodied by the work and research that Cisco does today, even though the founders left the company over 20 years ago. Founding Vision Bosack and Lerner’s vision for this technology was to enable disparate networks to easily communicate with one another and reliably share information. Sales figures: Net Income:
1991: $183.2 million 1991: $43.2 million
1992: $339.6 million 1992: $84.4 million History and Industry Position History Developed way to connect local area networks
Sold internetworking routers--best way to send data between networks
Linked different kinds of networks (PCs, Macs, etc.) First Cisco Router Sales for fiscal year ending July 1987: $1.5 million
By 1990 net income reached $13.9 mil. One of the first companies to have commercial success in field.
Went public in February of 1990 with a stock price of $18 and $224 million Market Cap.
10 years later- price up 60,614% Late 1990: Sandy Lerner is fired and Len Bosack resigns.
The two sold their founding stock for nearly $200 million, donating 70% to charity. Made first acquisition in 1993-Crescendo Communications

Revenues exceed $1 billion in 1994 1985 1995 1990 1986 2000 2005 2010 2012 December 1984 Company founded by Sandy Lerner and Lenord Bosack 1987 Reach agreement with Stanford Launch first routing innovation, AGS multi-protocol router 1988 Recieve funding from Sequoia Capital John Morgridge named President and CEO Cisco goes public on NASDAQ under listing CSCO at $18 February 1990 Late 1990 Sandy Lerner and Len Bosack, founders, are fired and resign September 1993 Aquire Crescendo Communications 1994 Revenues reach $1 billion Acquire Combinet, Internet Junction, and Grand Junction three Ethernet switching companies. Introduce Cisco Catalyst Enter Service Provider market. 1996 1997 First appears in Fortune 500 at 332 Reach 10,000 employees 1998 Becomes fastest company to achieve a market capitalization of $100 billion, doing so in just 14 years 1999 Acquires Cerent Corp. The company's most expensive acquistion. March 2000 Briefly the worlds most valuable company with a $550 billion market cap. Recognized as a Top 25 Best Place to work by Fortune. John Chambers named CEO Acquires The Linksys Group, entering the home networking sector. 2003 Announce TelePresence meeting solution, entering video conferencing sector. WebEx, video conferencing provider, acquired 2006 2007 September 2012 Acquired ThinkSmart Technologies and NDS Group Streamline Sales and Engineering Groups May 2011
Most valuable company in world briefly in March 2000- had been third behind GE & Microsoft
$550 Billion market cap at height of dot-com boom
Acquisitions plus alliances with Microsoft, HP, & Intel led to huge presence in all networking sectors
Great ability to quickly enter emerging markets and expand . Industry Position
Set record for fastest growth to $100 billion (12 years from IPO, 14 years from founding) Announced 9/26 acquisition of ThinkSmart Technologies
Aiming to enhance wireless network infrastructure so that customers can make better, faster business decisions
Completed $5B purchase of NDS Group for video software and content security solutions
Broadens service provider presence Leading data center industry with 96.26B market cap
Household brand with “The Human Network”
Could possibly end up first $1 Trillion company 2012 Future Outlook Leading data center industry with roughly $100B market cap
Household brand with “The Human Network” campaign
Could possibly end up first $1 Trillion company Products and Performance World’s leading supplier of data networking equipment and software. Priority Markets and Products "In a rapidly changing industry, our long term strategy-focused on delivering intelligent networks, technology and business architectures built on integrated products, services, and software platforms will allow us to help our customers achieve their top priorities and fuel our success over time."
-CEO, John Chambers Five Foundational Priorities Core Business
-associated services
Data center virtualization and cloud
Architectures for business transformation
-security Performance D Market Cap (USD Bil)

52-Week High (USD)

52-Week Low (USD)

52-Week Total Return %

YTD Total Return %

Last Fiscal Year End


Employee Count 101,88





31 July 2011

$11.7 billion

66,639 Vital Statistics Stock Price Performance Delivering in a Tough Economic Environment Cisco presents what is viewed by many as favorable risk-reward
Moderately higher Q4 results than analyst expectations
Revenue grew 4.4% year over year to $11.7 billion, free cash flow grew $2.8 billion, compared to $2.6 billion in the year-ago quarter Renewed focus on core markets
Reorganization of company has pushed toward product integration and service delivery
$33 billion net cash balance.
Estimated to reach more than $44 billion in next 5 years Dividend Payment Dividend payment increased 75% to $0.14 per quarter
3.2% dividend yield $3 billion of cash to fund its dividend in fiscal 2013 Comparison to Sector Product Strategy Help customers use technology to address their imperatives

Designed to simplfy and secure customers' network infastructures Financial Summary and Forecasts Well positioned for next-generation virtualized data center due to our history of strong execution and M&A, product breaths, geographic diversity.
Key growth opportunities include virtualization, collaboration, and video. Continues to dominate data networking and shares router duopoly with Juniper.
Key competitiors are HP and Juniper, Inc.

Up and coming competitior Huawei will be Cisco's future greatest competition. Return to pre-dot com bust but may be impossible, but significant prospects of growth remain
Remain at the forefront of all our products Bibliography Management Practices Bio: John Chambers B.A./B.S. degrees from West Virginia;
M.B.A. from Indiana University
Began career at IBM; joined Wang Laboratories and finally Cisco in 1991 “Rewarding Competitors Over Collaborators No Longer Makes Sense” WSJ Article 13 Feb 2006: Ongoing feedback as opposed to annual

“History has taught us that relying on inspections is costly, improves nothing for very long, and makes the organization less competitive.” ~Cisco Company Blog Motivation? Employees<1 year median salary= $63,202
Employees>20 years median salary= $119,843 Encourage Longevity Current Rank= 90; Previous Rank= 20
Reason for drop: major layoffs
Why Cisco?
Average salary for a Software Engineer IV= $136,400
Onsite childcare, fitness center
Job sharing, compressed workweek, telecommuting
49% minorities; 28% women; nondiscriminatory according to sexual orientation 100 Best Companies to Work For Employee Considerations Work-life balance
Cisco Virtual Office
Cisco WebEx
Cisco LifeConnection
Health Considerations
Professional Development
Performance-based compensation is designed to reward innovation, collaboration, and profitability
“The five Silicon Valley companies that handed out the most options in terms of value in 2009 were Oracle, Cisco, Google Inc., NetApp Inc. and Gilead Sciences Inc.” WSJ—4 March 2010
Employee Resource Groups
Veterans Programs
"Workplace Accessibility" At Cisco, multicultural women represent…

4% of corporate executives

4% of senior managers

6% of the top earners

20% of the company hires

11% of the company losses

17% of participants in mentoring programs

13% of participants in career counseling programs Numbers Don't Lie 100 Best Companies (#90), Fortune Magazine (January 2012)

Top 50 Companies for Executive Women (#8), National Association for Female Executives (February 2012)

World's Most Admired Companies (#42 of 358), Fortune Magazine (March 2012)

Best Place to Work, for Cisco Portugal, Great Place to Work Institute (March 2012)

Top 50 Organizations for Multicultural Business Opportunities (#12), DiversityBusiness.com (April 2012) 100 Best Corporate Citizens List (#43), Corporate Responsibility Magazine (April 2012)

Disability Matters Workplace Award, Springboard Consulting, (April 2012)

Top 20 Highest Rated Companies Hiring Interns (#10), Glass Door (May 2012)

Top 100 Ideal Employers for MBAs (#68), Universum (June 2012)

25 Best Companies for Multicultural Women (Top 10), Working Mother Magazine (June 2012) "The Proof is in the Pudding" The Bottom Line Highly adaptable management
Product- and People-Centric
6% Turnover Rate
Diversity & Accessibility Corporate Sustainability and Social Responsibility Focus Areas for Corporate Responsibility -Government and Ethics
-Supply Chain
-Our People
-Environment Social Responsibility and Society -Education
-Economic Empowerment
-Critical Human Needs Education and Healthcare Education Projects in Serbia, Rwanda, and Mexico Healthcare HealthPresence around the world providing cheaper medical care Economic Empowerment and Critical Human Needs Economic Empowerment -Provides computers in impoverished communities around the world-Impact Kenya Critical Human Needs -Community Voicemail
-Employee matching gifts, response to natural disasters, cash grants Sustainability -Use economically and ecologically responsible energy management
-Sell products that are energy efficient
-Product end life
-Telecommunications #1 IT company in the world, and #5 overall, for greenhouse gas (GHG)
-Lead by example
-Foster transparency
-Promote environmental standards
-Encourage dialogue John Chambers
Chief Executive Officer, President Rebecca Jacoby
Chief Information Officer Gary Moore

Chief Operating Officer Wim Elfrink
Chief Globalization Officer Padmasree Warrior
Chief Technology Officer Blair Christie
Chief Marketing Officer Pankaj Patel
Chief Development Officer Frank Calderoni
Chief Financial Officer Reorganization "Cisco Systems, Inc. unveiled a broad internal reorganization to simplify its management structure, which has been blamed for slowing decision-making and causing executive defections at the Silicon Valley company." WSJ
6 May 2011 Stanford came to Cisco in 1986 with a lawsuit that could have crippled the company.
They initially demanded over $11 million.
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