1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:07,840 --> 00:00:10,600 Speaker 2: Delighted to say that we're joined now by Cisco, CEI, 3 00:00:10,760 --> 00:00:13,640 Speaker 2: Chuck Robins, and actually, Chuck, I'm going to ask you 4 00:00:13,640 --> 00:00:15,800 Speaker 2: something that I felt like the analyst community didn't really 5 00:00:15,840 --> 00:00:18,560 Speaker 2: get to, and that is that there is this big 6 00:00:18,920 --> 00:00:23,400 Speaker 2: products refresh happening near term overcoming years. And I feel 7 00:00:23,400 --> 00:00:25,799 Speaker 2: like you've been trying to talk about Cisco as a 8 00:00:25,840 --> 00:00:28,800 Speaker 2: platform offering for a while and if we look at 9 00:00:28,840 --> 00:00:31,840 Speaker 2: that fiscal twenty six outlook is that baked into that 10 00:00:32,120 --> 00:00:35,440 Speaker 2: where Cisco is a platform offering and you folded security 11 00:00:35,479 --> 00:00:37,400 Speaker 2: into it. That's kind of what I think people want 12 00:00:37,400 --> 00:00:37,640 Speaker 2: to know. 13 00:00:38,800 --> 00:00:40,720 Speaker 3: Yes, well, first of all, thanks for having me and 14 00:00:40,920 --> 00:00:43,120 Speaker 3: I do. I want to thank the team and all 15 00:00:43,479 --> 00:00:45,920 Speaker 3: of the Cisco folks for just a great year. We 16 00:00:46,840 --> 00:00:49,400 Speaker 3: obviously had good order growth in Q four, we had 17 00:00:49,440 --> 00:00:54,200 Speaker 3: the great performance in the AI infrastructure orders. We actually 18 00:00:54,840 --> 00:00:57,960 Speaker 3: reported that we had taken down a approximately a billion 19 00:00:58,000 --> 00:01:00,200 Speaker 3: dollars revenue from those orders, which was something and that 20 00:01:00,240 --> 00:01:03,080 Speaker 3: everybody wanted to talk about. We talked through how we 21 00:01:03,240 --> 00:01:06,680 Speaker 3: fill the progress kicking in on security, and then to 22 00:01:06,760 --> 00:01:09,880 Speaker 3: your point, this product refresh cycle that we are beginning 23 00:01:10,920 --> 00:01:16,560 Speaker 3: will happen over years, and honestly, we just turned on orderability. 24 00:01:17,160 --> 00:01:20,120 Speaker 3: Large customers take a lot of time to evaluate put 25 00:01:20,160 --> 00:01:21,880 Speaker 3: these things in labs before they put it in their 26 00:01:21,880 --> 00:01:24,960 Speaker 3: critical infrastructure. But the points you make about the platform 27 00:01:25,040 --> 00:01:29,520 Speaker 3: is really important because as we get into agentic AI, 28 00:01:30,400 --> 00:01:33,639 Speaker 3: with the low latency costant communication that's going to occur, 29 00:01:34,520 --> 00:01:37,440 Speaker 3: we're going to have to do security in the network. 30 00:01:37,920 --> 00:01:39,199 Speaker 4: There is no other alternative. 31 00:01:39,240 --> 00:01:42,480 Speaker 3: You cannot introduce latency by sending it to a security appliance, 32 00:01:43,000 --> 00:01:45,560 Speaker 3: and we are the only company that has both networking 33 00:01:45,680 --> 00:01:48,440 Speaker 3: and security technology to fuse it together to create that 34 00:01:48,480 --> 00:01:49,960 Speaker 3: platform effect that you're describing. 35 00:01:51,720 --> 00:01:56,280 Speaker 2: AI is a double edged sword. Chuck, it's margin dilutive. 36 00:01:57,600 --> 00:01:58,640 Speaker 2: How do you think about that? 37 00:02:00,160 --> 00:02:02,160 Speaker 3: Well, I think we have always had a portfolio of 38 00:02:02,160 --> 00:02:05,400 Speaker 3: products that had various margin profiles. I mean, we had 39 00:02:05,440 --> 00:02:07,640 Speaker 3: a point in our history where the telco and the 40 00:02:07,680 --> 00:02:10,080 Speaker 3: service provider world was as much as thirty five thirty 41 00:02:10,080 --> 00:02:11,800 Speaker 3: six percent of our business, and that was a different 42 00:02:11,840 --> 00:02:15,720 Speaker 3: margin profile than the enterprise. And so we just manage 43 00:02:15,760 --> 00:02:17,840 Speaker 3: it the same way we have all all along, So 44 00:02:18,280 --> 00:02:19,360 Speaker 3: I'm not too worried about that. 45 00:02:20,040 --> 00:02:23,680 Speaker 1: Meanwhile, Chuck, that massive opportunity ahead that you articulate with 46 00:02:23,720 --> 00:02:26,880 Speaker 1: AI infrastructure. They're bringing in of two billion of orders, 47 00:02:26,880 --> 00:02:30,160 Speaker 1: the billion dollars of revenue already. Is it the platform 48 00:02:30,200 --> 00:02:32,840 Speaker 1: offering that helps you push out and fend against some 49 00:02:32,880 --> 00:02:34,960 Speaker 1: of the other competitors that want in on that. Of 50 00:02:35,000 --> 00:02:36,400 Speaker 1: course HPE is trying to get in. 51 00:02:36,440 --> 00:02:40,120 Speaker 4: You've got broad Com. Is that how you set yourself apart? Well? 52 00:02:40,160 --> 00:02:41,919 Speaker 3: I think the key to remember with this is that 53 00:02:42,040 --> 00:02:45,119 Speaker 3: it's networking systems and it's optics. That's primarily what we're 54 00:02:45,120 --> 00:02:49,600 Speaker 3: selling for AI infrastructure, And there's really only three companies 55 00:02:49,600 --> 00:02:52,200 Speaker 3: on the planet that can deliver the networking silicon that 56 00:02:52,280 --> 00:02:55,600 Speaker 3: these customers require, and we're one of them. And so 57 00:02:56,360 --> 00:02:58,560 Speaker 3: you know, they're looking for low power requirements, they're looking 58 00:02:58,560 --> 00:03:02,000 Speaker 3: for meeting their dates, they're looking for speed bandwidth deployments, 59 00:03:02,360 --> 00:03:05,400 Speaker 3: you know, and we're hitting that right now with them. 60 00:03:05,400 --> 00:03:07,080 Speaker 4: And we've really built great relationships. 61 00:03:07,120 --> 00:03:09,200 Speaker 3: If you if you go back five or six years ago, 62 00:03:09,240 --> 00:03:10,760 Speaker 3: I had to try to convince people that we were 63 00:03:10,800 --> 00:03:13,800 Speaker 3: rebuilding relationships here. And even if you go back fifty twelve, 64 00:03:13,880 --> 00:03:16,480 Speaker 3: fourteen months ago when we gave them the target of 65 00:03:16,480 --> 00:03:18,120 Speaker 3: one billion dollars in orders, I think there were a 66 00:03:18,160 --> 00:03:20,960 Speaker 3: lot of skeptics, and the team actually delivered really well 67 00:03:21,000 --> 00:03:23,079 Speaker 3: and we have great relationships with these customers. 68 00:03:23,080 --> 00:03:26,959 Speaker 1: Now we are joined by Chuck Robins, Cisco CEO, and 69 00:03:27,280 --> 00:03:30,480 Speaker 1: you know, you beat your things that previously others were 70 00:03:30,480 --> 00:03:33,359 Speaker 1: cynical of, but the market moves with you. Many wanted 71 00:03:33,480 --> 00:03:37,160 Speaker 1: even more in terms of your full year revenue guidance. 72 00:03:37,520 --> 00:03:38,880 Speaker 1: Some are even going as far as to say that 73 00:03:38,960 --> 00:03:41,000 Speaker 1: maybe you're suggesting a little bit of a cautious it 74 00:03:41,320 --> 00:03:42,880 Speaker 1: spend for the next fiscal year. 75 00:03:43,040 --> 00:03:46,120 Speaker 4: Do you abide by that, Chuck, No, we don't see that. 76 00:03:46,200 --> 00:03:49,119 Speaker 3: We see we haven't seen any sort of slowdown at all. 77 00:03:49,520 --> 00:03:52,480 Speaker 3: The only place we've seen that challenge, as has been reported, 78 00:03:52,600 --> 00:03:55,120 Speaker 3: was in US Federal. You know, our order our product 79 00:03:55,200 --> 00:03:57,920 Speaker 3: order growth was seven percent. If you take out US Federal, 80 00:03:58,000 --> 00:04:01,280 Speaker 3: we grew ten percent. And if you think about security, 81 00:04:01,400 --> 00:04:04,240 Speaker 3: same thing. If we take out a US Federal we 82 00:04:04,280 --> 00:04:08,120 Speaker 3: grew double digits and security on orders. And I also 83 00:04:08,160 --> 00:04:09,880 Speaker 3: talked about the fact that if we look at the 84 00:04:09,920 --> 00:04:13,160 Speaker 3: fiscal year that we just entered, our US Federal team 85 00:04:13,200 --> 00:04:15,920 Speaker 3: is actually forecasting a return to growth, so hopefully that 86 00:04:15,920 --> 00:04:17,920 Speaker 3: won't be a headwind in the next year. So we 87 00:04:17,960 --> 00:04:21,400 Speaker 3: haven't seen anything meaningful, but we're also cognizant that we 88 00:04:21,400 --> 00:04:24,279 Speaker 3: were operating in a pretty complex and dynamic environment. 89 00:04:26,000 --> 00:04:28,960 Speaker 2: Chuck, We love to talk about the big projects on 90 00:04:29,000 --> 00:04:31,920 Speaker 2: Bloomberg Tech, the big data center projects. Are there any 91 00:04:31,960 --> 00:04:35,279 Speaker 2: specific examples of projects you're involved in that do you 92 00:04:35,279 --> 00:04:37,080 Speaker 2: think are really needle moving for Cisco? 93 00:04:38,560 --> 00:04:42,120 Speaker 3: Well, all the cloud providers are needle moving, and over 94 00:04:42,160 --> 00:04:44,520 Speaker 3: time the neo cloud segment as well as the sovereign 95 00:04:44,520 --> 00:04:47,000 Speaker 3: clouds we think are going to will be a big 96 00:04:47,040 --> 00:04:50,559 Speaker 3: part of our business. Also, we're just getting started in those. 97 00:04:51,000 --> 00:04:53,960 Speaker 3: If I hit on a few of those. The sovereign 98 00:04:54,040 --> 00:04:57,520 Speaker 3: AI data centers that we talked about in UAE as 99 00:04:57,520 --> 00:04:59,279 Speaker 3: well as in Saudi are the early ones. We're having 100 00:04:59,279 --> 00:05:03,760 Speaker 3: discussions and their Asian countries in Africa, in Europe, you 101 00:05:03,800 --> 00:05:08,440 Speaker 3: have this push for on PRIM sovereign applications, So from 102 00:05:08,520 --> 00:05:11,799 Speaker 3: geopolitical perspective and a risk perspective, they want more control 103 00:05:11,839 --> 00:05:13,719 Speaker 3: over the tech stack that they have in their countries. 104 00:05:13,760 --> 00:05:16,000 Speaker 3: So that's more of a sovereign play, and we're one 105 00:05:16,040 --> 00:05:19,520 Speaker 3: of the unique companies who can actually deliver say Splunk 106 00:05:19,600 --> 00:05:23,520 Speaker 3: on PRIM or they're asking for WebEx on PRIM, which 107 00:05:23,600 --> 00:05:25,880 Speaker 3: we can do so, and then the neo clouds we 108 00:05:25,920 --> 00:05:28,360 Speaker 3: could talk about as well, but that's another emerging opportunity 109 00:05:28,400 --> 00:05:28,680 Speaker 3: for US. 110 00:05:30,240 --> 00:05:34,120 Speaker 2: I don't think many appreciate the scale of Cisco. 111 00:05:34,200 --> 00:05:34,719 Speaker 4: Sometimes. 112 00:05:35,120 --> 00:05:36,760 Speaker 2: You've got a lot of credit, by the way, on 113 00:05:36,800 --> 00:05:39,799 Speaker 2: this program, at least about how you've communicated tariff's impact. 114 00:05:40,160 --> 00:05:42,880 Speaker 2: But you're basically one of the biggest and leading network 115 00:05:42,960 --> 00:05:47,479 Speaker 2: chip producers globally, and this is an administration that wants 116 00:05:47,520 --> 00:05:50,480 Speaker 2: more US manufacturing. So you have the volume of gear, 117 00:05:50,480 --> 00:05:52,839 Speaker 2: you design your own chips, TSMC makes them for you. 118 00:05:52,920 --> 00:05:55,760 Speaker 2: The economics kind of works in your favor. Have you 119 00:05:55,880 --> 00:05:58,920 Speaker 2: made some commitment to do what this administration is trying 120 00:05:58,920 --> 00:06:02,640 Speaker 2: to do, which is that process that you've mastered, but 121 00:06:02,800 --> 00:06:04,640 Speaker 2: just bring it to the States in some form. 122 00:06:06,040 --> 00:06:10,960 Speaker 3: Well, I think that much like you in Nvidia, AMDUS others, 123 00:06:11,320 --> 00:06:13,960 Speaker 3: there are a lot of companies that actually rely on 124 00:06:14,000 --> 00:06:18,520 Speaker 3: TSMC the for the fabrication of the silicon, and they've 125 00:06:18,520 --> 00:06:21,800 Speaker 3: obviously made commitments on their side to actually build out 126 00:06:21,800 --> 00:06:24,839 Speaker 3: capacity in the United States, and so we're happy to 127 00:06:24,839 --> 00:06:28,440 Speaker 3: see that happening. The thing that people don't really realize 128 00:06:28,560 --> 00:06:32,000 Speaker 3: is that we've maintained a US manufacturing footprint all along, 129 00:06:32,560 --> 00:06:35,120 Speaker 3: and so we have a footprint in the US today 130 00:06:35,160 --> 00:06:39,320 Speaker 3: that we can look at expanding. But I think it's 131 00:06:39,360 --> 00:06:42,320 Speaker 3: just important for us right now to wait and see 132 00:06:42,360 --> 00:06:44,400 Speaker 3: exactly where all this stuff lands. If you go back 133 00:06:44,440 --> 00:06:48,760 Speaker 3: to twenty eighteen when the China tariffs hit, our teams 134 00:06:48,520 --> 00:06:52,040 Speaker 3: have made moves and mitigated roughly eighty percent or so 135 00:06:52,200 --> 00:06:55,240 Speaker 3: of those, and so we just continue to look at 136 00:06:55,279 --> 00:06:57,159 Speaker 3: these things as they come out, figure out what the 137 00:06:57,200 --> 00:06:58,920 Speaker 3: best plan of action is, and then we act. 138 00:07:00,080 --> 00:07:03,719 Speaker 1: When you think about planning ahead and business continuity, Chuck, 139 00:07:03,839 --> 00:07:06,719 Speaker 1: when you see what's happened with AMD and video and 140 00:07:06,760 --> 00:07:09,120 Speaker 1: the deal they've cut to access China, when you think 141 00:07:09,160 --> 00:07:12,520 Speaker 1: about exporting more broadly, you thinking that might come your 142 00:07:12,560 --> 00:07:14,080 Speaker 1: way of pay to play in the future. 143 00:07:15,720 --> 00:07:16,800 Speaker 4: I have no idea. 144 00:07:16,920 --> 00:07:18,920 Speaker 3: We wake up every day and we try to figure 145 00:07:18,960 --> 00:07:21,880 Speaker 3: out what's transpired and what's happening in the world, and 146 00:07:21,880 --> 00:07:25,280 Speaker 3: how do we react to it. I've talked about over 147 00:07:25,360 --> 00:07:28,480 Speaker 3: time that the current crop of CEOs in the United 148 00:07:28,520 --> 00:07:32,640 Speaker 3: States have basically been operating in times of uncertainty or 149 00:07:32,680 --> 00:07:37,600 Speaker 3: crisis or certainly very dynamic environments, and so we're all 150 00:07:37,680 --> 00:07:40,000 Speaker 3: used to just dealing with whatever changes are. 151 00:07:39,880 --> 00:07:40,560 Speaker 4: Coming our way. 152 00:07:41,720 --> 00:07:44,720 Speaker 3: You know, there's the old saying that you can deal 153 00:07:44,720 --> 00:07:46,160 Speaker 3: with the world as it is or how you'd like 154 00:07:46,200 --> 00:07:48,240 Speaker 3: it to be, and just we just wake up and 155 00:07:48,600 --> 00:07:51,920 Speaker 3: we deal with what comes at us and try to 156 00:07:51,920 --> 00:07:55,800 Speaker 3: plan accordingly, try to do scenario planning, but then deal 157 00:07:55,840 --> 00:07:56,560 Speaker 3: with it as it is. 158 00:07:57,280 --> 00:07:59,360 Speaker 1: And when you're controlling your own destiny. You've been doing 159 00:07:59,400 --> 00:08:00,560 Speaker 1: a bit of M and A and you mentioned the 160 00:08:00,600 --> 00:08:03,240 Speaker 1: Sprung coffering and how that helps you access the Lexi 161 00:08:03,320 --> 00:08:05,760 Speaker 1: view up for example. Anymore M and A on the 162 00:08:05,840 --> 00:08:07,440 Speaker 1: rise of particularly when it comes to AI. 163 00:08:08,880 --> 00:08:13,320 Speaker 3: We're always looking Our strategy hasn't changed. Obviously, valuations are 164 00:08:13,360 --> 00:08:17,520 Speaker 3: quite frothy in that space. But if there's something that 165 00:08:17,880 --> 00:08:21,640 Speaker 3: helps us advance our strategy more effectively, then we're always 166 00:08:21,680 --> 00:08:23,720 Speaker 3: willing to take a look at it. I would say 167 00:08:23,760 --> 00:08:26,680 Speaker 3: that M and A is not the strategy. We have 168 00:08:26,800 --> 00:08:30,680 Speaker 3: our product strategy and our solution strategy for our customers, 169 00:08:30,720 --> 00:08:33,200 Speaker 3: and if there's an acquisition that helps us accelerate that, 170 00:08:33,600 --> 00:08:35,800 Speaker 3: then that's what we're really interested in. And you think 171 00:08:35,800 --> 00:08:39,080 Speaker 3: about places like AI, infrastructure or security or observability. 172 00:08:39,080 --> 00:08:41,040 Speaker 4: In those kind of areas, they're always interesting to us. 173 00:08:42,400 --> 00:08:46,160 Speaker 2: Chuck, how's the relationship with Nvidia evolving since it was 174 00:08:46,200 --> 00:08:46,880 Speaker 2: all announced. 175 00:08:47,920 --> 00:08:48,439 Speaker 4: It's great. 176 00:08:49,120 --> 00:08:51,679 Speaker 3: Our team and their team's execs had dinner last night, 177 00:08:51,840 --> 00:08:57,240 Speaker 3: and we're working on architectures for neocloud, architectures for the enterprise. 178 00:08:58,200 --> 00:09:01,360 Speaker 3: We're working on go to market joint go to market together. 179 00:09:02,200 --> 00:09:04,040 Speaker 3: So I'd say it just continues to get stronger. And 180 00:09:04,320 --> 00:09:05,959 Speaker 3: we're really on the front end now of a lot 181 00:09:05,960 --> 00:09:09,040 Speaker 3: of the technology integrations that we've been working on, and 182 00:09:09,160 --> 00:09:12,440 Speaker 3: we're on the front end of the real enterprise wave 183 00:09:12,679 --> 00:09:15,280 Speaker 3: of this AI. If you think about it, it started in 184 00:09:15,320 --> 00:09:17,800 Speaker 3: the back end networks of the cloud providers. 185 00:09:18,240 --> 00:09:18,800 Speaker 4: It's movement. 186 00:09:18,800 --> 00:09:20,400 Speaker 3: It's obviously going to have an impact on the front 187 00:09:20,440 --> 00:09:22,400 Speaker 3: end networks. It's going to have an impact on the 188 00:09:22,520 --> 00:09:26,920 Speaker 3: enterprise and even the telco business that we saw this quarter. 189 00:09:27,040 --> 00:09:29,640 Speaker 3: We had telco and cable our orders were up greater 190 00:09:29,720 --> 00:09:32,560 Speaker 3: than twenty percent, and a lot of that was attributed 191 00:09:32,600 --> 00:09:34,199 Speaker 3: to their preparation for AI. 192 00:09:35,120 --> 00:09:38,720 Speaker 1: Chuck Robins, Cisco CEO, been fantastic to speak with you today. 193 00:09:39,040 --> 00:09:39,959 Speaker 4: Thank you very much, and be