Chapter 1: What is the main topic discussed in this episode?
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Ed, you're looking at the company that's adding the most in points upside.
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Chapter 2: What insights does Chuck Robbins share about Cisco's earnings?
The cloud stuff is routable and revenues realized over the life of the term. And the on-prem stuff gets recognized immediately. And we just had a major shift in how our customers consume it, which is great for us in the long term that they're buying more cloud-based solutions. But it creates a little bit of a challenge on revenue during the quarter.
The good news is the networking business is doing incredibly well and can cover that for us.
Chuck, it is fair to say at a minimum that the Cisco of today isn't the same as the Cisco of 2000. What you've done is kind of been open about the product lineup and you've used M&A to change the footprint of the company. What's your latest thinking on that, the products that you offer and what you need to do either organically or inorganically to offer what the world of AI wants?
I think the big things that we did, we obviously introduced a lot more software into our portfolio in areas that are strategic, like security. And the Splunk acquisition has been a great one.
I think the other thing that's worth calling out is this investment that we started in 2016, to be clear, on our silicon strategy that is absolutely the reason that we're having success today in the hyperscaler space. If we did not have our silicon, and develop and design our own silicon, we wouldn't be participating at all. It's just black and white.
And so as we look at both internal innovation as well as inorganic opportunities, we're very focused on security. We're very focused on AI. We've made some tech and talent deals. Anything that can help us accelerate our solutions in those areas, we're open to look at.
Chuck, I do not apologize for this next question. Are we or are we not in an AI bubble?
Oh, it's just so funny. Look, the customers that are buying the predominant amount of this technology have incredible balance sheets, have incredible cash flow, have incredible profitability. I think Caroline said it. They actually pay their bills, and so... And they view it as an existential issue for them.
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Chapter 3: How is Cisco positioning itself in the global AI market?
That's a really key element. They don't view this as something that's nice to have. They don't view it as something that is okay if we're successful, great. If we're not, great. They view it as existential, which you see with the level of spending that they're putting into it. It's a lot and it's moving fast.
But the difference between now and 2000 is that these are massive companies with strong financial performance and they believe in this 100%. So I don't think it's going to change. We haven't gotten into physical AI. We're just getting into synthetic training. We haven't gotten into robotics. We haven't gotten into the enterprise in a big way yet.
And so there's a huge opportunity ahead for all of us, I believe.
Well, Chuck, Bloomberg Intelligence Analysis says your projections are conservative. Briefly, are they conservative?
Well, I think you said that last quarter, so you proved to be correct 90 days ago. But look, I think based on what we know today, we're 90 days into the year. We're taking what we have in our backlog, what we see in the forecast. But again, we have three more quarters to play out. Lots of things can change. The world's very dynamic.
But we're very confident in the numbers that we put up yesterday.
Cisco CEO Chuck Robbins, always a joy to catch up with you.
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