Cisco Systems Inc and UBS Group AG to Host Tech Talk on Cisco’s IoT and Applications Strategy-Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steve Milunovich - UBS - Analyst : That is terrific, Rowan. Thank you so much. Let me start with the mandatory financial questions around recurring revenue and M&A. How much of your business is recurring? And how does that contribute to the overall Cisco story, which is one where you are trying to increase recurring revenue and software in particular? And then second, on the M&A side, I would assume that your group is an area where we could see significant M&A. It seems like the Company is willing to consider any size of deal, but on the other hand, valuations are quite high right now. How do you think about the areas that you might have an interest in?

Question: Steve Milunovich - UBS - Analyst : On the M&A side?

Question: Steve Milunovich - UBS - Analyst : That is terrific. Regarding Spark, it's the infrastructure of the communication system going forward, and you've told the channel that Spark really doesn't have competition and your partner should be walking away with the market. But how would you assess the competition? You have Microsoft teams, Slack, and other offerings out there. What differentiates you? Is it the single per user per month subscription? Is it being on-prem and in the cloud? How would you describe that?

Question: Steve Milunovich - UBS - Analyst : Shifting to the Internet of Things, maybe you could just, again, summarize for investors how you're going to be monetizing IoT across the Company? And then, as I understand it, this is less of a horizontal opportunity, more of a vertical. You've got to understand the industries you're dealing with. And I traditionally don't think of Cisco as necessarily deep in industry knowledge. Does your channel have it? I know you are partnering with IBM, Ericsson, GE; does that put you where you need to be in IoT?

Question: Steve Milunovich - UBS - Analyst : Terrific. Then moving over to the AppDynamics side. You talk a little bit about titration in AppD and how those fit together. Can you talk a bit about the analytics capability that Cisco has? You need to bulk up in AI; I have heard talks about that. But Cisco is not typically thought of as the leader in AI. To what degree do you need to do more there? And are there other areas that you need to move into? One of the, I think, real positives for Cisco is obviously your brand in the enterprise and your channel. So I've always thought that customers give you permission to sell more things. Are there other areas that you're not in, related to titration in AppD that we might see you move into?

Question: Steve Milunovich - UBS - Analyst : Thank you. Operator, can we poll for questions?

Question: Steve Milunovich - UBS - Analyst : Okay, I will just continue on with a couple more. One of the concerns investors have is, a lot of management change, obviously, at Cisco. Maybe you can talk, to your perception, of what's going on. You haven't been there for long, so you are part of the new guard, but it does feel like Chuck is trying to create a bit of a transformation culturally REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 17, 2017 / 4:00PM, CSCO.OQ - Cisco Systems Inc and UBS Group AG to Host Tech Talk on Cisco's IoT with the Company, very forward-looking. You are certainly at the spearhead of that in terms of having simplified of what's going on in collaboration. How would you describe what's going on culturally at the Company?

Question: Steve Milunovich - UBS - Analyst : You make a great point there about incentives and so forth. Do you feel like the sales force is on board? Do you have to off-board some people and bring new people in who understand the new model? And similarly, this is very different for the channel? Is this going to continue to leverage

Question: Steve Milunovich - UBS - Analyst : Well, that's great. I think that's a great place to end. So Rowan, thank you so much for your time and we look forward to hearing more from you at the Analyst Day in June.

Question: Steve Milunovich - UBS - Analyst : Terrific. Thank you, investors, for joining us today.