Cisco Systems Inc at Bank of America Merrill Lynch Global Technology Conference Transcript

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

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : We heard from Arista right before this presentation that they're also talking about growth. So, just as a way of introduction, if you don't mind to present, just present your areas of responsibilities within the company and then just kind of state your views of the market and just as a high level how you see Cisco evolving with the change in the network, very high level and then I'll take us through more specific questions.

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : Great. So, if I start from a high level, in the last quarter, datacenter was up but overall switching was down and then Chuck Robbins, your CEO, said that he views the switching market as [no-growth] environment. So if datacenter is up, other parts are going down. Can you discuss the other parts before we focus on datacenters which will be the focus of our discussion. Can you discuss the other parts that are the majority of revenues right now and are dragging switching down, what's going to happen with the other parts that will stabilize or what's going to cause them to migrate to some growth areas over time?

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : How long does it take because, again, we're talking about more than 50% of switching revenues where if I look at the last seven to ten years, you have been constantly losing share to HP, Dell, some others and the question is what turns around, or how quickly you can turn around the trends and bring more software capabilities and take advantage of some of the innovations in this space. Is the campus environment even demanding it, meaning in datacenters there is a clear demand for software over hardware, this is being dictated or the trend is being set by the big Cloud companies. I don't see the same trend in campuses right now, I don't see the same pressure in campuses unless there is pressure but you don't -- all I see now is more share losses because of pricing pressure rather than any big technology change.

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : Right, we just interviewed, in the other room, we interviewed before that an executive from Arista and he said, and that goes back to your datacenter, he said, you know, Cisco's growth in datacenters, a lot of it is 7K migration, 7K upgrades and not really footprint gains, etc. So, again, that's a normal competition kind of like declaration. But what I'm asking you is about the areas of view with the 9K, with the HDI, what are the business cases where you're seeing success and what are the business cases where you're seeing less success? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 01, 2016 / 6:30PM, CSCO.OQ - Cisco Systems Inc at Bank of America Merrill Lynch Global Technology Conference

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : The ACI was over 50% of datacenter sales last quarter or 50% of datacenter sales growth last quarter was related to the ACI, who are the target customers for the ACI? Are these Cloud companies or more enterprises, existing customer or new customers, how do you target?

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : Got it. This morning when we interviewed the CIO, or CTO of Bank of America he said the infrastructure partners need to support our legacy infrastructure, which bodes very well for Cisco. He also said that the -- however, it has to be completely open.

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : And the question I have for you is how do you balance and what do you do between being proprietary, you want to be proprietary because there are more revenues in the proprietary world for you to being open and open up completely the network and then into that -- that opens up the opportunity for others to come into the network and having a mixed environment. So, how do you balance between the two and can you take us through a little bit of historical perspective like what was your position on being open versus being closed four years, five years ago and how it changes where you are today?

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : Right, I understand it but at the end of the day the goal is to bring more vendors to the network and then have, in a very practical way, to do what Microsoft is doing, right, you have Cisco, you have sales, you have Arista, all of them [top of brand]. In the old world, five years ago it was just Cisco. So in the world where you have multi-vendor and you have more vendors, and Bank of America tells you, we're going to bring more vendors to the network, so in a world where you start sharing your footprint with others, how do you grow, how do you make more revenue, right? If you open up too much you're going to lose more position. If you open up not enough then you're going to lose the entire position because maybe customer [sales] is not [open] enough. So, I understand what you're saying about openness but at the end of the day you are going to lose some footprint on the hardware side. How do you deal with it and you grow revenues enough in other areas to compensate for that?

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : So let me ask you a different way. This is hard data, if I look at the (inaudible) or any of the vendors, in the last three years your market sharing datacenter switching went down. I mean, I'm using (inaudible) and they talk about 72% to 59% to 58%; numbers could vary, but it doesn't matter how they count it but if I look at datacenter switching markets, all of them, different numbers say that Cisco lost share in the last three years. So now the question is, with ACI, with a 9K portfolio, with a 6K and everything else you're having, do you think you can stabilize share or even grow share going forward? Is it differentiated enough to a point where you'll reverse the trends we've seen in the last two years. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 01, 2016 / 6:30PM, CSCO.OQ - Cisco Systems Inc at Bank of America Merrill Lynch Global Technology Conference

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : So, let me ask this also a different way. In the last quarter your sales took the top ten service providers, sorry, Cloud providers was up 31% and Chuck said that over 50% of that was switching. So what changed in the last quarter with the Cloud providers that suddenly you're growing so well?

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : My last question, we're running out of time so I'll go through my last question; routing within switching. So on the merchant silicon side, (inaudible) and others are incorporating routing functionalities into switching and we heard from Arista that that opens up new opportunities for datacenter interconnected. You don't have to go through the public basically Internet in order to connect datacenters, you can do it more directly. How is Cisco playing in this market? How much of it -- and I'm not looking for a number, I'm looking for kind of just a discussion. How much of it is cannibalistic, how much of it is adding to the oppor -- cannibalistic meaning you're the biggest routing company?

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : So how much of it is cannibalistic, how much of it is adding to the opportunity of selling equipment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 01, 2016 / 6:30PM, CSCO.OQ - Cisco Systems Inc at Bank of America Merrill Lynch Global Technology Conference

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : [That's good]. So we ran out of time but maybe if there's any questions from the audience we can probably take one question. I think there is none, it means I covered everything.

Question: Tal Liani - Bank of America Merrill Lynch - Analyst : Excellent, thank you very much.