Cisco Systems CEO Chuck Robbins, who joined the company in 1997 and took the helm in 2015, said the company is not going to miss another opportunity with artificial intelligence.Cisco Systems Inc. chief executive officer Chuck Robbins says the company missed a major opportunity to expand 10 years ago as cloud computing took off. But he insists it won’t make that mistake again with
The shift to software is also part of a wider goal of creating a more stable revenue model, in contrast with the more inconsistent pattern of network equipment sales. Software products can be rolled out faster and give the company revenue that is “more predictable, and a little less stressful,” Mr. Robbins said. So far, the company earns 50 per cent of its revenue from recurring sources.
To position itself for a greater focus on AI, Cisco has shed employees and made the largest acquisition in its history to boost its software offerings. “Did we buy them just for growth? I would say no, it’s an incredibly strategic fit first. But they will help us with growth,” Mr. Robbins said. He expects the acquisition to be accretive to the company’s cash flow in Year 1 and its earnings-per-share in Year 2.
But he’s doubtful those expansions will warrant a higher valuation for now. For that to happen, “we’d have to see a marked improvement in Cisco’s ability to compete in public cloud and AI environments and market share gains, which we don’t expect,” he said.