Internet 2.0 will drive productivity growth

California, July 27, 2009
Mint
John Chambers/CISCO The crash has hit Silicon Valley as hard as anywhere else. The only consolation is that this time, at least, it didn't start here. But while other firms are hunkering down and trying to survive, networking giant Cisco Systems ($130 billion market value, $40 billion in annual sales) continues to stride forward.

"Even in this downturn," says chairman and CEO John Chambers, sitting at the table in his modest, mementocrammed office, "We intend to be the most aggressive we've ever been."

A decade ago Cisco was known for building the switching systems (called routers) that find the most efficient path for information on the Internet. These days it has a presence in just about every corner of the Web's infrastructure--from networking hardware (switches, gateways and the like) to network management software (CiscoWorks) to the Linksys router that runs the wireless network in your home.

As much as three-quarters of the world's digital data now passes through Cisco equipment, the company estimates.

This massive expansion has come not merely by internal growth, but through one of the biggest (and most successful) merger-and-acquisition programs in high-tech history.

Despite taking the same hit as the rest of the computer industry earlier this year, Cisco's stock is climbing (up 17% to more than $21.50 in the last month), the company has cut an incredible $1.5 billion in operating expenses, and earned an upgrade this week to "outperform" from Credit Suisse. It has also announced a major sponsorship of the 2012 Olympic Games in London.