Cisco doesn't seem to think that Ascend is a long-term competitor...
"Chambers said Cisco expected further consolidation in the
industry, but saw existing players in the network equipment
making sector such as Bay Networks , 3Com Corp
and Newbridge Networks Corp to remain the major
competitors."
By Kevin Morrison
SYDNEY, March 24 (Reuters) - Cisco Systems Inc said on
Tuesday it expected to continue to grow by acquisition, while
boosting the proportion of group revenue from video, voice and
data network equipment services.
"I think there is a good chance that our service provider
revenue, directly or indirectly...will if we are successful move
from 30 percent to 50 percent of our revenue by 2001," Cisco
president John Chambers told reporters after a business luncheon
speech.
Chambers, who is on a short visit to Australia to meet
customers and see Australian prime minister John Howard on
Wednesday, said the increase in revenue from voice, data and
video network technologies would be helped by acquisitions.
The expected change in Cisco's current revenue stream away
from its traditional market in computer network equipment
supplies into voice, video and data would mean competing more
with telephone equipment supply groups, he said.
"If you look at who our likely competitors are going
forward, in terms of the strongest players (they) are Lucent,
Nortel, Ericsson, Siemens, Alcatel and NEC," said Chambers, who
is also Cisco chief executive officer.
"We would like to partner with at least two or three of
those if we can," he told reporters after giving a speech to the
Trans-Tasman Business Circle. Cisco has formed a pact with
Alcatel of France last year.
Lucent Technologies Inc , Nortern Telecom Ltd (Nortel)
, Ericsson , Siemens AG , NEC Corp
and Alcatel are looking to boost sales in internet
related technologies, which combine data, video and voice.
Chambers said Cisco expected further consolidation in the
industry, but saw existing players in the network equipment
making sector such as Bay Networks , 3Com Corp
and Newbridge Networks Corp to remain the major
competitors.
Cisco, which has grown sales 10-fold over the past five
years to about US$6.5 billion, largely through mergers, plans
about 15 acquisitions this calendar year with an increasing
amount in video, voice and data technology firms, Chambers said.
"Anywhere between a third to a half of our acquisitions will
go in the area of voice, data and video integration because that
market is going to consolidate," Chambers said.
He said the future acquisitions would mainly be small
non-public companies with a strong engineering focus.
"We also prefer companies that are small, rather than
mergers amongst equals, We think merger amongst equals fail."
The strategy has worked for Cisco with the 24 acquisitions
the company has made over the past four years, he said.
About 90 percent of the purchases had been successful with a
merger staff attrition rate of six percent, although it was
still to early to judge six mergers, he added. |
