--Cisco CEO gives confident view of margins
--CFO affirms long-term earnings growth target
--To start "Tomorrow Starts Here" marketing campaign
(Adds comments from CFO in paragraph four and from CEO in
paragraph seven.)
By Drew FitzGerald
Cisco Systems Inc. (CSCO) should continue to deliver steady
revenue growth by expanding its identity from a maker of network
equipment to a diversified provider of information technology,
Chief Executive John Chambers said Friday.
The long-time Cisco chief also dismissed criticism of the
company's traditionally high-margin business of selling routers and
switches, which some analysts warn could slump as competitive
pressures hurt their selling prices.
"We think we're going to hold our gross margins relatively
steady over the next three years," Mr. Chambers told analysts and
reporters gathered in New York for the company's annual
forward-looking discussion.
Chief Financial Officer Frank Calderoni affirmed the company's
long-term adjusted earnings growth target of 7% to 9%, with
adjusted gross margins in the high 20% range. The San Jose, Calif.,
company also reiterated last year's revenue prediction, which
called for a compound average growth rate between 5% and 7%,
largely driven by expanding its business in fields such as
collaboration software and IT services.
Cisco plans to kick off a new marketing campaign Monday to tout
that shift, using the slogan "Tomorrow Starts Here" to highlight
the company's younger businesses. Its added business lines include
NDS Group, a provider of television set-top boxes that the company
acquired this year, and likely Wi-Fi management company Meraki,
which Cisco offered $1.2 billion to buy.
"The middle of everything we talk about is intelligent
networks," Mr. Chambers said.
He provided the battle between retailer Wal-Mart Stores Inc.
(WMT), a big Cisco customer, and Amazon.com Inc. (AMZN) for online
consumers as an example, offering an opportunity for the networking
and software company to benefit from an increasingly complex
competitive environment.
Cisco shares were recently up a penny at $19.49 Friday.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
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