Dow Jones Newswires -- June 25, 1999
DJ Cisco Systems Boosts Investment In Asia; Revenue Up
SHANGHAI (Dow Jones)--Cisco Systems Inc. (CSCO), a U.S.-based Internet equipment maker, has poured "disproportionately large" amounts of capital into Asia in the past year in a bid to position itself for an economic rebound in the region, said Richard Freemantle, Cisco's vice president of Asia Pacific.
"We saw an opportunity for Asian economies to turn around, and as other companies were slowing investment we stepped on the gas," said Freemantle.
Speaking to a small group of reporters in Shanghai, Freemantle said that the company's revenue growth from Asia has risen more than 50% in the past year, and forecast similar growth in the coming year. He declined to release specific revenue figures, though he said China currently accounts for about the same amount of revenue as Australia.
Cisco has doubled its staff in Asia excluding Japan. Its China team has increased to 300 from 60 employees in the past nine months.
He added that Cisco looks likely to surpass initial expectations that it would buy $100 million in Chinese equipment before the end of the year 2000.
"That's a very conservative estimate," added Jia-Bin Duh, president of Cisco Systems, China.
Freemantle said that China's telecommunications companies, some of the largest buyers of Cisco products, are likely to shift towards using Internet technology for telephone services.
"Internet telephony costs are only 10% of a traditional phone line" and companies are starting to offer long distance calling services over the Internet at huge discounts to traditional long distance carriers, said Freemantle.
"The Internet revolution is now moving into the voice world," he said. "Government leaders (in Asia) now see (Internet) technology as vital. Countries who get on board will prosper, those that don't will get left behind."
Cisco supplies 85% of the world's large companies with equipment for Internet networking, Freemantle said. Cisco cooperates with a number of telecommunications companies in China, including China Telecom and China United Telecommunications Co., two of China's major telecom firms, Freemantle said.
Cisco provided Unicom with the equipment to launch a telephone card for international calling in China, which officially began selling last Friday, Duh said.
In addition, Cisco earlier this week signed a memorandum of understanding with the Guangdong Provincial Posts and Telecommunication Administration to buy $200 million in Cisco equipment over the next five years, Duh said.
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