But spend a little time with either one of them and you quickly realize that while outwardly different — Levie is known to favor sneakers and perform magic tricks at parties while Chambers wears impeccable suits and loves to talk politics — they’re remarkably alike.

Cisco is the lumbering $46 billion (2012 sales) networking giant that is trying to parlay its world-beating expertise in selling equipment that runs the world’s networks into becoming the world’s leading vendor of enterprise IT and a significant supplier to companies embracing cloud computing. He’s also a veteran D: All Things Digital speaker.

Box, meanwhile, is all about the cloud. It’s the enterprise-oriented file-sharing and collaboration service that has raised more than $300 million in venture capital funding and is well on its way to being one of the most anticipated initial public offerings of 2014. Today marks Levie’s first time on the D: All Things Digital stage.

11:23 am: Session is starting. Walt Mossberg just introduced Levie and Chambers.

Levie: Referring to the previous session on Glow, there’s a “natural partnership” for Bang With Friends.

Walt: Everyone knows Cisco and has known it for decades. You’ve been powering a lot of computing and Internet for a long time. General question: Corporate IT was one of the most regressive forces in technology. Those who came up with great ideas would run into a wall of excuses. That seems to have been changing in the last few years. The power and instinct to say no to something new and interesting has dropped away. Is that a real thing and how is it changing your businesses?

Levie: The first 20 years, the complexity of building software and systems and implementing it meant you needed to have a lot of internal expertise. There was less democratization and innovation. The cloud and mobile have inverted that in the last three to five years. When people bring their own devices into the workplace, they need to bring their own software into the workplace. CIOs are getting the idea that they can either let it happen or get on the front end of it and improve productivity.

Chambers: What you’re seeing is a faster pace of innovation than I’ve ever seen. Speed all of a sudden is the key ingredient. How do you make big data useful? CEOs are saying they’re also technology companies. Seeing speed in terms of competition can be the differentiation.

Walt: There was a time when enterprise companies led the way. Is that still the case?

Chambers: It used to be consumer driven. If I were betting, I’d say it’s going to flip in the next few years.

Levie: The expectation in the consumer Web is that you can share anything, any time, but that hasn’t yet happened in the enterprise.

Levie: You’ll have all news types of use cases.

Chambers: If you think of the Internet in four generations, the fourth will be Internet of Things. It’s going to be driven by businesses because businesses have to connect all the devices.

11:31 am: Walt: It seems a lot of people who work under the thumb of corporate IT, they still have to have a parallel set of devices. Some of the systems they use at the office are old and haven’t been upgraded. Or an old work laptop versus their personal one.

Levie: There’s some pent-up demand that will unravel. When we used to meet with CIOs they’d be running Windows machines. Now we see them with MacBook Airs and iPhones.

Levie: The three biggest deals we sold last year were to companies created in the 1800s.

Chambers: If businesses leaders can’t get what they want from their own IT shops, they will get it from someone else. I don’t know a CIO today that thinks they can limit the device you can bring to work. BYOD trumps security, even in the Department of Defense.

Walt: Isn’t this an enormous culture shift? Those products are made by companies that weren’t designed for use in the enterprise, and don’t even have an enterprise sales force. (Apple doesn’t.)

Chambers: Creative destruction is speeding up, and the top five or six IT players are going to change in the next few years.

Levie: We’ll go meet customers, and their primary relationship with companies like Oracle (which he selected randomly) is getting audited to make sure they’re paying enough money for the software they use.

Walt: John, you’re the established guy, and Aaron is the challenger guy. Is that right?

Chambers: We see the market in much the same way. If you watch where CEOs are watching the industry, they’re looking for speed. He sees $14 trillion in profits emerging from Internet of Things. Chambers said Cisco and Box are working on partnering.

11:41 am: Chambers said Cisco was too early with the Flip Camera. It would have been better had the service moved to the cloud.

Walt: Can you focus on both the enterprise and consumers?

Levie: To sell to the enterprise, you have to have good consumer-grade instincts. Today that is the standard by which every enterprise software company is going to be judged. It has to be on par with consumer grade technology.

Walt: So why not sell Box service to consumers?

Levie: It conflicts with our ability to roll out to 50,000 employees at large companies. We’re going to put all our wood behind that arrow.

Chambers: Cisco doesn’t enter markets where it can’t get 40 percent market share or be a leader.

Walt: But you did try consumer.

Chambers: We try different things. We have two out of three acquisitions work out. Today we’re number two in the world in cloud. We have 60 percent market share in mobility. Not all moves work. We compete against market transitions not companies.

Walt: Talk about the ability of the Internet to bear the traffic that is coming.

Chambers: The traffic is going to increase 300 percent in five years. It will move from being PC-like devices. Other devices will be more than 50 percent. We’ll build routers that are able to do huge volumes.

Walt: How much of this traffic will be cellular networks where there is scarcity of capacity? Aren’t we going to hit some kind of wall?

Chambers: The price is going to come down. Architectures are going to change. The network will become the platform.

Levine: As you have a proliferation of Wi-Fi, that creates an opportunity for enterprise technology companies to work in new markets in new ways.

11:49 am: Time for Q&A.

Question: Could you talk more about the reinvention of Cisco for the next era? Talk about services like WebEx.

Chambers: Services by definition will occur. We will base our future on an architectural play. We’ve done 15 acquisitions in the last 14 months. Nearly all of them were software, services and recurring revenue.

Question from Esther Dyson: For Chambers. You were one of the first valley companies to focus on employee health. What is your experience with this? Have you saved cost?

Chambers: A large part of successful companies is culture. We treat employees as family. When employees have life-threatening illnesses in their families we move heaven and Earth to help them. We think health is going to be one of the fastest growing verticals in the next five years. Big investments in IT are coming.

Dyson: Investments in prevention rather than care after?

Chambers: Completely agree. Prevention is the least expensive form of care.

Question from Rolfe Winkler of The Wall Street Journal: It’s hard to overstate the deflationary effect that Amazon is having on enterprise IT spend. Cisco makes 60 percent gross margins selling routers and switches. Why isn’t Cisco — like HP and Dell — a melting ice cube?

Chambers: Been answering that question for years. It’s about who gets the market transitions right. We’re going to provide products to companies selling IT as a service. Secondly, it’s about how do you deliver capabilities to your customers. We win wither way.

Levie: While things like Amazon Web Services take out some costs in the near term. Later it drives the need for more IT. If companies like the Ciscos and the Dells of the world can figure it out.

Question for Aaron from Steward Alsop: I have Box, Dropbox, Google Drive and Apple iCloud. How do you solve all the different services?

Levie: We thought it should be easy to store and share, we thought there would be similarity among services. Our view is that where the data is stored is less important than how the data is managed.

Question about the Internet of Things.

Chambers: When you have $14 trillion worth of profits, you’re going to see every company moving on it. The combination of server technology and storage with networking will succeed. (He’s describing Cisco’s Unified Computing System.)

And that’s it, we’re done.

Full D11 Conference Coverage

One of the great pleasures of producing D is that every year the discussion is different, because the technology, Internet and media businesses are so dynamic. But, as we convene this, the 11th edition of our conference, the digital world is indisputably at an inflection point: The PC has peaked, and it’s all about post-PC mobile devices, software and services. That means smartphones and tablets, for now, with wearable devices coming on strong.

Our D speakers and attendees have been talking about this trend for years, long before Apple’s Steve Jobs unveiled the iPhone in January of 2007. But this year, we gather just about six weeks after the report of the worst quarterly decline in PC sales ever recorded, while sales of smartphones and tablets continue to surge. Android devices, which didn’t exist until late 2008, cover the earth, and Apple alone has sold more than 140 million tablets since April of 2010. And Samsung seems to be everywhere.

It’s no surprise, then, that everyone’s new slogan is “mobile first!”

This change has staggering implications for companies ranging from unknown software startups to the “Gang of Four” platform giants identified by Google Executive Chairman Eric Schmidt at D9 — Amazon, Apple, Facebook and Google — and the giant he didn’t list, Microsoft.

What happens to huge companies like Dell and Hewlett-Packard that lack much of a post-PC or mobile presence? Can the company that kicked off the new era, Apple, maintain its reputation for innovation in the post-Jobs era under the onslaught of the Android juggernaut?

Can Google maintain control of its Android platform in the face of Samsung’s power and Amazon’s refusal to use Google’s apps? Can Facebook’s aggressive new mobile strategy succeed? Will Amazon do as well at phones and other devices as it appears to have done at tablets? And can Microsoft become the third big platform player with Windows 8 and Windows Phone? If not, does BlackBerry have a shot?

And more: Will wearable devices that go beyond fitness bands, such as Google Glass, be the next historic game-changers? Or will they remain niche products?

Most of all, how does the mobile surge and the wearable promise change user behavior, entertainment and productivity? What will be the impact on society?

Finally, given all these sweeping changes, can anybody other than a few big companies make real money in mobile?

We’ll discuss these questions and more with a stellar lineup of speakers, one that we’re especially proud to have sit in our signature red chairs this year.

Leading off will be Apple CEO Tim Cook, leader of arguably still the most influential tech giant, but one that faces the challenges of high expectations and its fiercest competition in years. Has Apple lost its cool, or is it just secretly readying its next big surprise to take the world by storm?

Apple’s nemesis, Google, will be represented by Sundar Pichai, who recently took over the Android platform in addition to his longtime leadership of Chrome and Google’s apps. Will he combine the two platforms? How can he balance Android’s open-source roots with the need for Google to make money off the platform?

We’ll also welcome back Facebook COO Sheryl Sandberg, who is not only helping to steer a hugely important company trying to conquer mobile, but also inspiring millions of women with her “Lean In” book and larger project.

Twitter’s smart and funny CEO, Dick Costolo, will also return to the D stage to talk about the future of his iconic service, especially on mobile. And Ben Silbermann, the co-founder of Pinterest, another social networking success story, will make his D debut.

Elon Musk, who is merely a pioneer of both the electric car and private space-flight industries, will take our stage for the first time. We wonder: What has he done for us lately?

And to answer the question of what’s up at Google’s hardware arm, Motorola, we’ll have its CEO, Dennis Woodside, and his advanced research chief, Regina Dugan, who wowed the crowd at D9 when she appeared as the head of DARPA, the Pentagon’s futuristic research arm.

Since speech is a core, vital technology in the mobile era, we’ll welcome Paul Ricci, CEO of speech giant Nuance. Will he recognize our accents?

The CEO of General Electric, Jeff Immelt, will talk about how the digital revolution affects traditional corporate giants. And Tom Staggs, who heads Disney’s theme parks, will show off the latest technology being used by visitors to navigate the iconic destinations.

Recently departed Windows chief Steven Sinfosky, who also ran Microsoft’s Office division, will share his thoughtful views on the new post-PC landscape.

For another look at the overall landscape, we’ll have Kleiner Perkins partner Mary Meeker walk us through her famous annual Internet report. And PayPal co-founder Max Levchin will show off his latest project, which links technology and anatomy.

This year, we’ll also have some pairings of speakers we think will yield interesting insights. Aaron Levie, the CEO of Box, the well-known enterprise cloud-storage firm, will appear jointly with John Chambers, CEO of enterprise tech giant Cisco.

The CEO of Sony, Kazuo Hirai, will be joined by Jed York, the boss of the San Francisco 49ers, to talk about the intersection of tech and sports. From the entertainment world, we’ll have a trio of managers of famous stars, who have been investing in tech in a big way: Troy Carter, chairman and CEO of the Atom Factory; Guy Oseary, partner of A-Grade Investments; and Scooter Braun, founder of SB Projects. Respectively, the three manage Lady Gaga, Madonna and Justin Bieber.

The witty and sharp Barry Diller, who knows the traditional entertainment and Internet businesses inside and out, will be back, no doubt to defend his right, via his latest venture Aereo, to stream broadcast television. And new CNN boss Jeff Zucker will join him to discuss the future of all TV.

We’ll have Anne Sweeney, co-chair of Disney Media Networks and president of the Disney/ABC Television Group, paired with I. Marlene King, creator and executive producer of ABC’s tech-savvy hit show “Pretty Little Liars.”

Finally, we have a fascinating lineup of demos, including not one, but two companies that focus on another emerging post-PC segment: The Internet of Things.

So buckle up and get ready to enjoy, learn and network. It’s time for D once again.

In case you missed anything, here’s a quick roundup of the news that powered AllThingsD this week:

1. As AllThingsD’s Kara Swisher and Peter Kafka were first to report this week, Yahoo is seriously thinking about buying hipster blogging service Tumblr. In fact, Yahoo’s board is scheduled to consider a $1.1 billion all-cash deal on Sunday.
2. Google wanted to dominate the headlines this week during the company’s annual I/O conference … just maybe not like this. By sending Microsoft a cease-and-desist, they helped promote that rival’s anti-Google campaign.
3. That little drama didn’t come up during the official proceedings of I/O, but a lot else did. Here’s a rundown of all the news Google announced in its three-and-a-half-hour opening keynote.
4. Watch this: An interview with Bill Gates, in which the Microsoft founder talks about his longtime relationship with Steve Jobs, on “60 Minutes.”
5. Can productivity apps for the iPad make it as useful as a traditional work PC? Walt Mossberg puts them to the test.
6. Speaking of the iPad, the Justice Department is closing in on Apple with an e-book price fixing case … but one of the seemingly most damning pieces of evidence, a line from a letter from Steve Jobs to James Murdoch, is a little less damning in context.
7. Web video services like Amazon, HBO and Hulu all say they’re seeing significant growth. But is anyone cutting into Netflix’s lead? A new report says: Nope!
8. BlackBerry is bringing its messenger application, BBM, to iPhones and Android phones this summer. But is it too late?
9. Cisco’s earnings only barely beat analysts’ expectations this week, but that beat sent the company’s stock up 9 percent in after-hours trading. Arik Hesseldahl got CEO John Chambers on the phone to talk about where Cisco is and where it’s going.
10. And lastly, if you want more battery life out of your iPhone on the go, you may have considered a special re-juicing case. Product reviewer Lauren Goode tries the battery boosters before you buy.

To stay on top of the latest, follow AllThingsD on Twitter and Facebook, and subscribe to our daily email newsletter.

By 7:30 pm ET, Cisco shares had risen to $23.06, having closed at $21.21 during the regular session. Its results, reported earlier today, were only slightly ahead of the consensus view, but as with so many things today, slightly good is good enough.

The better news is that Cisco has historically been a pretty good barometer on the state of the tech economy generally. What it sees in its results, good or bad, is what other companies usually see within a couple of quarters.

“Slow and steady growth” was the phrase of the day. Sales grew by slightly more than 5 percent, but several segments grew faster. Service revenue grew by more than 7 percent year on year, while sales of products grew 5 percent.

Products sold into data centers, mainly servers in Cisco’s UCS line, grew by a healthy 77 percent, but accounted for only $515 million, or slightly more than 4 percent of sales. Wireless sales grew by 27 percent, but at $523 million weren’t much bigger as a percentage of revenue.

Service provider video grew 30 percent, accounting for nearly $1.3 billion in sales. And at least part of that growth can be attributed to NDS, the Israeli software company for which Cisco paid $5 billion last year.

In switching, Cisco’s biggest business segment, sales were $3.4 billion, down 2 percent year on year, but when you compare that to the results of other networking companies like Juniper, Riverbed and F5 Networks that have been reporting more difficult quarters in recent weeks and months, a drop of 2 percent isn’t so bad.

I just got off the phone with Cisco CEO — and D: All Things Digital speaker — John Chambers. A quick summary of our conversation is below:

AllThingsD: John, it felt like a fairly positive quarter in a tough environment. What’s really going on?

Chambers: I’d break it into four pieces. First, it was our ninth consecutive quarter with record revenue. And it was the sixth where earnings grew faster than revenue. That’s a pretty good indicator that we’re growing well in a tough environment. Secondly, we’ve moved from being the No. 1 communications company to having a shot at being the No. 1 IT company at the moment when those two things will actually combine. … It’s that transition that we now have in front of us that’s kind of exciting. It also says that we’re in the right technologies: Cloud, data center, mobility, video. We’re also the thought leader on the Internet of everything, which will be the next major transition for the enterprise and service providers. The fourth one was the geographic breakdown. I don’t think anyone saw as strong a set of numbers in the U.S. as we did, and it was across all market segments. Public sector grew 5 percent, enterprise grew 10 percent, commercial grew 13 percent, service providers grew 10 percent. It means that our relevance is changing. It also means that, barring a surprise, the U.S. economy is going to continue to recover at this pace. And it has to for the rest of the world to come out of all this.

Let’s talk about IT. If you’re becoming more of a general IT player, if you see yourself shaking up that business, then who do you see yourself taking business away from?

In the data center, it’s clearly the IBMs, the Hewlett-Packards and the Dells of the world. In the wireless space, it’s often the startups or some of the traditional players. It wasn’t so long ago that startups like Aruba were awfully tough on us. In the data center with software and hardware and silicon coming together, there’s the people who think it’s going to be a software-only world [like Big Switch --Ed.]. We think it’s an architectural play that we’re going to win on. So our competitors are different in every category, but that’s what you want. If the customers are going to buy an architecture that solves a business problem and you’re the only major supplier that crosses the service provider and the enterprise and commercial segments, and you go from the cloud and hybrid clouds to the data centers, and reach any device and you’re agnostic about whatever device it is, that is a strong position to be in.

And still one of your biggest segments, switching, was down slightly. What’s going on there?

It has been a tough environment there. As you know, our industry peers have had terrible year-to-date numbers on their stocks. When I look at the F5s and Junipers and Riverbeds of the world, you’re seeing them surprising the market and declines in their share prices. Same thing with the IT players. We’re one of the few players that hit and exceed expectations in that category. So it speaks to our relevance changing. If you’re selling standalone products, the market gets really tough. And speaking of our competitors, a lot of them said they never saw us coming. We’re pretty good at flying under the radar at first and then blowing right by, and then being tough. We’re really tough to beat.

It’s at this point that I pick a song that I think best portrays Cisco’s results. It has become a little tradition that I began when Cisco started to turn around after another sequence of disappointing quarters, and when we talk, Chambers always asks about it.

With the phrase “slow and steady” appearing so much in Chambers’ comments, and with the quarter’s results generally feeling upbeat, I thought the muscular 1971 Aretha Franklin classic “Rock Steady” fit the bill. Here it is.

Earnings on a per-share basis were 51 cents on sales of $12.2 billion. Both numbers beat the consensus of Wall Street analysts, who had expected earnings of 49 cents on sales of $12.18 billion.

Gross margins were 63 percent, which is about flat from the year-ago quarter. Sales in the Americas grew the most and were flat or slightly down in EMEA and Asia. Chambers said on the conference call with analysts, which is just getting under way, that sales in emerging countries showed “double digit” growth on a percentage basis.

Overall sales grew 5 percent. Here’s a snapshot from Cisco’s presentation slides, showing sales in various segments. As you can see, the data center business continues to grow like crazy, but it’s still a relatively small segment within Cisco. Service provider video grew nicely as well, as did the wireless segment. Switching, a key segment, was down. Chambers said that was because of weaknesses in Europe and in public sector spending generally.

CFO Frank Calderoni said the company expects fourth-quarter sales to grow year on year in the range of 4 percent to 7 percent, which works out to about $12.2 billion to $12.5 billion in sales, which is more or less in line with what the Street expects. He said gross margins will be 61 percent to 62 percent. He said he sees per-share earnings to come in between 50 cents and 52 cents versus a consensus view of 51 cents.

Cisco shares are rising in after-hours trading. They’re at $22.04, up nearly 4 percent, having closed at $21.21 during the regular session.

Here’s Cisco’s original announcement.

Cisco Reports Third Quarter Earnings
SAN JOSE, CA — May 15, 2013 – Cisco (NASDAQ: CSCO)

Q3 Net Sales: $12.2 billion (increase of 5% year over year)
Q3 Earnings per Share: $0.46 GAAP; $0.51 non-GAAP

Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its third quarter results for the period ended April 27, 2013. Cisco reported third quarter net sales of $12.2 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.5 billion or $0.46 per share, and non-GAAP net income of $2.7 billion or $0.51 per share.

“Cisco is executing at a very high level in a slow, but steady economic environment. We are especially pleased with our ninth consecutive record revenue quarter. We are starting to see some good signs in the US and other parts of the world which are encouraging,” stated Cisco Chairman and CEO John Chambers. “We have the right products, the right solutions and our customers are coming to us to solve their biggest business problems. The pace of change is increasing and Cisco is well positioned.”

Chambers continued, “We have always believed that the Internet will revolutionize the way we work, live, play, and learn. This has never been truer than it is today, with cloud, mobility and video all coming together to deliver the Internet of Everything and unprecedented new opportunities for businesses and consumers. We’re excited about the future.”

GAAP Results

Q3 2013 Q3 2012 Vs. Q3 2012
Net Sales $ 12.2 billion $ 11.6 billion 5.4 %
Net Income $ 2.5 billion $ 2.2 billion 14.5 %
Earnings per Share $ 0.46 $ 0.40 15.0 %

Non-GAAP Results

Q3 2013 Q3 2012 Vs. Q3 2012
Net Income $ 2.7 billion $ 2.6 billion 4.7 %
Earnings per Share $ 0.51 $ 0.48 6.3 %

Net sales for the first nine months of fiscal 2013 were $36.2 billion, compared with $34.4 billion for the first nine months of fiscal 2012. Net income for the first nine months of fiscal 2013, on a GAAP basis, was $7.7 billion or $1.44 per share, compared with $6.1 billion or $1.13 per share for the first nine months of fiscal 2012. Non-GAAP net income for the first nine months of fiscal 2013 was $8.0 billion or $1.50 per share, compared with $7.5 billion or $1.38 per share for the first nine months of fiscal 2012.

A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 6.

Cisco will discuss third quarter results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://investor.cisco.com.

Cash and Cash Equivalents and Investments

Cash flows from operations were $3.1 billion for the third quarter of fiscal 2013, compared with $3.3 billion for the second quarter of fiscal 2013, and compared with $3.0 billion for the third quarter of fiscal 2012.

Cash and cash equivalents and investments were $47.4 billion at the end of the third quarter of fiscal 2013, compared with $46.4 billion at the end of the second quarter of fiscal 2013, and compared with $48.7 billion at the end of fiscal 2012.

Dividends and Stock Repurchase Program

During the third quarter of fiscal 2013:

The combination of cash used for dividends and common stock repurchases under the stock repurchase program totaled approximately $1.8 billion.

Cisco paid a cash dividend of $0.17 per common share, or $905 million.

Cisco repurchased approximately 41 million shares of common stock under the stock repurchase program at an average price of $20.85 per share for an aggregate purchase price of $860 million. As of April 27, 2013, Cisco had repurchased and retired 3.8 billion shares of Cisco common stock at an average price of $20.35 per share for an aggregate purchase price of approximately $77.7 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under this program is approximately $4.3 billion with no termination date.

“We executed as we said we would, achieving our revenue and profitability objectives,” stated Frank Calderoni, executive vice president and chief financial officer. “We are moving the business forward by executing on our strategy of driving long-term value to our shareholders.”

Select Global Business Highlights

Cisco completed the acquisition of privately held Intucell, Ltd., a provider of advanced self-optimizing network (SON) software solutions that enable mobile carriers to plan, configure, manage, optimize, and heal cellular networks automatically, according to changing network demands.
Cisco announced and completed the acquisition of Cognitive Security, a privately-held company headquartered in Prague, Czech Republic. Cognitive Security’s solution integrates a range of sophisticated software technologies to identify and analyze key IT security threats through advanced behavioral analysis of real-time data.
Cisco announced its intent to acquire SolveDirect, a privately held company headquartered in Vienna, Austria that provides innovative, cloud-delivered services management integration software and services.
Cisco announced its intent to acquire privately held Ubiquisys, a leading provider of intelligent 3G and long-term evolution (LTE) small-cell technologies that provide seamless connectivity across mobile heterogeneous networks for service providers.

Cisco Innovation

Cisco unveiled its new IP Interoperability and Collaboration System (IPICS) solution, a new set of multivendor, interoperable communications capabilities for operations and dispatch centers across government and enterprise industries.
Cisco announced its Cisco Integrated Services Router with Application Experience (ISR-AX), which converges routing, security technologies and a comprehensive suite of application-level services into a single-box solution designed to deliver the essential services needed at branch offices.
Cisco introduced its next-generation 100 Gigabit CMOS-based transceiver, Cisco CPAK™, the industry’s most compact and power-efficient 100 Gps transceiver technology, designed to reduce space and power requirements by more than 70 percent compared with alternative transceiver form factors, such as CFP.
Cisco introduced product innovations for data center and cloud environments including the following: highest-density 40-gigabit Layer 2/3 fixed switch; simplest hybrid cloud solution; and expansion of the Cisco® Open Network Environment with the most extensible controller.
Cisco announced new Cisco Unified Access™ solutions that simplify network design by converging wired and wireless networks.

Select Customer Announcements

Vodafone Netherlands, the second largest telecom service provider in the Netherlands, deployed the Broadband Network Gateway (BNG) Service Manager — enabling it to increase scalability and service velocity for its enterprise customers.
Cisco announced that MetroPCS Communications began a commercial launch of its Cisco Carrier-Grade Internet Protocol Version 6 Solution as a first step in the transition of its mobile Internet network to Internet Protocol version 6 (IPv6).
Cisco announced that GET, a leading cable operator in Norway, selected the Cisco Videoscape™ Unity video services delivery platform to transform its TV service and enable the deployment of next-generation entertainment experiences, including personalized and synchronized TV across multiple devices.
Cisco announced that SFR, a leading mobile telecommunications provider in France, selected Cisco to expand and enhance its mobile Internet network in order to accelerate the deployment of advanced 4G LTE services to its customers.
Cisco announced that Turkcell, the leading communications and technology company in Turkey with more than 35 million subscribers, has deployed the Cisco ASR 5000 Series as the foundation for its advanced mobile Internet network.

Analysts are expecting per-share earnings of 49 cents on sales of $12.2 billion. They’re also expecting Cisco to guide to 51 cents on $12.5 billion in the current quarter.

In a note to clients Monday, UBS analyst Amit Passi reiterated a “buy” rating, saying that checks with CIOs and resellers showed that Cisco might hang in there. “We think Cisco can meet or exceed consensus earnings estimates driven by improving business mix and efficiencies on the cost side,” he wrote. “Cisco’s diversified portfolio across end markets, customer types, and technologies should allow it to better weather the current storm of weak customer spending than some of its competitors.”

Even so, he’s cautious on the quarter ending in July. “We remain somewhat cautious heading into earnings this quarter in light of weaker spending trends across enterprise software, telecommunications and government customers, and recent negative data points in wireless [networks] during the month of April.”

One of the best parts of planning the next D: All Things Digital conference — which is in its 11th iteration this year — is trying to figure out what group of top tech and media players will make the very best combination to bring real insight, news and forward thinking to our amazing audience, at the event and also online.

Some interviews one knows with certainty are going to be epic — such as our joint one with Apple’s Steve Jobs and Microsoft’s Bill Gates at D5 in 2007. Others, like our terrific session with Oracle’s Larry Ellison last year at D10, gave the attendees a new look at someone they thought they already knew well. Some are just plain funny — such as former Groupon CEO Andrew Mason’s famous “death stare” in 2011 at D9.

What’s most clear throughout them all is that Walt Mossberg and I have been lucky in getting high-caliber and engaging speakers who are willing and able to sit in our signature red Steelcase chairs and answer our sometimes thorny questions.

This year’s D11 is no exception. While there are many more speakers we can’t announce quite yet, here’s the start of the list for the 2013 conference, which has been sold out since last fall:

As we did last year, we’ll be having Kleiner Perkins partner Mary Meeker walk the audience through her famous annual Internet report, giving both her observations and prognostications about where the digital space has been and where it is headed next. Meeker’s slides come fast and furious, and often set some of the themes that will doubtless be raised by other speakers.

One speaker who has dominated many key memes this year has been Facebook COO Sheryl Sandberg, whom we last had at D6 in 2008, when she appeared with CEO and co-founder Mark Zuckerberg. Since then, a lot has happened at the social networking giant — including a tumultuous IPO and a need to quickly develop its mobile business — so there’s plenty to discuss related to Facebook. Of course, there is also a lot to talk about related to her recent book on women in the workplace, titled “Lean In,” which has garnered just a little bit of attention of late.

Another very voluble speaker will surely be Twitter CEO Dick Costolo. We felt it was important to bring him back onstage, given all the change at the social communications company over the last year, from its aggressive efforts to build out its advertising business to its tangles with Facebook to its expected IPO in 2014. Twitter has emerged as a key company on the global stage — and it is Costolo’s job to keep it there.

One of the most explosive startups on the scene recently has, of course, been scrapbooking phenom Pinterest, whose steady CEO and co-founder Ben Silbermann will appear at our conference for the first time. Unlike many attention-seeking entrepreneurs, Silbermann has quietly pushed the young company to the forefront of e-commerce and other key digital arenas by creating a unique and elegant way for people to share interests of all kinds. Despite its recent huge valuation, Pinterest has an unusual heft and influence in tech and beyond that few other such companies can claim.

Also of interest is the new leader of Motorola Mobility, the smartphone maker that is owned by Google but is being run separately by CEO Dennis Woodside. A longtime exec at the search giant, Woodside is charged with creating world-class hardware for the Android platform that can attract consumers and compete with a spate of rivals — while still maintaining a certain distance from the mothership.

Such an effort will require a lot of innovation, which is why Woodside is bringing along someone well known to D — Regina Dugan. The charismatic exec first appeared at D9 when she was director of the federal government’s Defense Advanced Research Projects Agency, and she riveted the crowd with stories of Mach 10 airplanes and other cloak-and-dagger tech. Now she’s an SVP at Motorola Mobility, where she leads the Advanced Technology & Projects group.

How big companies are reacting to the Internet revolution has always been an important topic at our conference over the years, and there is no bigger conglomerate to ask about it than GE and its chairman and CEO Jeff Immelt. While the company operates across many segments, from energy to technology infrastructure to capital finance, the changes and impact of digital have been paramount for GE. In fact, Immelt recently wrote a provocative editorial on the “Industrial Internet” and the rise of intelligent machines about leveraging “the power of the cloud to connect machines embedded with sensors and sophisticated software to other machines (and to us) so we can extract data, make sense of it and find meaning where it did not exist before.” Heavier stuff than your basic jet engine (which GE makes, by the way).

Change has not been easy for Web-centric companies, either, including Cisco, whose CEO John Chambers has led the networking giant through the growth of the Internet since the very beginning. Still, Cisco has struggled with a number of recent consumer efforts, even as it has been aggressively shifting its focus to the cloud to continue to dominate in the network space and to push the idea of the “Internet of Everything,” where it plays a central role.

To ratchet up the conversation, we decided to pair Chambers with one of the enterprise’s most clever and fast-moving entrepreneurs, Aaron Levie of Box. The cloud services company just raised a mega round of funding and is headed for an IPO next year, but we also invited Levie because he is very, very funny and manages to explain the massive changes moving through the sector in a very, very funny way. We look forward to his take on how smaller upstarts like Box, Dropbox and many others are managing to best the big companies with innovation and chutzpah.

Speaking of that, there is no better tell-it-like-it-is exec in digital media than Barry Diller of IAC. We have had the razor-sharp Diller onstage at D before, but we thought it was time to bring him back because of his aggressive investment in Aereo, the Web TV service that mainstream TV networks abhor. Diller, who has run such a media operation before, is perhaps the perfect person to be disrupting them now, and to talk about the state of the media industry today. He’s also still owner of a lot of key Internet franchises that have had to react to the shift in consumer tastes and desires.

In another pairing, Jeff Zucker will join Diller onstage to debate how media is faring. It’s an important issue for him, since he was just hired by Time Warner to reinvigorate its CNN cable news brand in a fast-changing environment. Zucker has worked everywhere in the TV sector, but rethinking how it creates and delivers its offering in the future — while making more than digital dimes — is a massive task.

Also huge is the uphill battle new Sony CEO Kazuo Hirai faces in turning around the fortunes of the Japanese consumer electronics giant. As he overhauls the once-dominant company, he also must push forward on a number of fronts that include mobile, digital imaging, videogames and network services. There is also the upcoming debut of the PlayStation 4 console, which has yet to be unveiled, all of which has added pressure to Hirai’s quick-moving efforts at turnaround at Sony.

Hirai will be appearing with Jed York, CEO of the San Francisco 49ers, who is in the midst of building a digitally tricked-out new stadium for the storied football franchise, which is being described as a “large data center.” And more — including addressing the importance of technology in delivering the modern sports entertainment experience. The issue is one that every sports owner on the planet thinks about these days, as fans expect more and more ways to share, communicate and interact.

Using a sports metaphor, it’s a pretty good line-up so far, but the D11 speaker list is far from complete, with more very big names to be announced in the coming weeks. And, especially since we have no more tickets to sell, it’s important to remember that we will be using AllThingsD to bring you the news, videos and more that will allow everyone to experience it all, no matter where they are.

1.) Samsung Galaxy S4: Bigger Display and Bolder Software — But Is It Better Enough?

2.) How Apple Gets All the Good Apps

3.) Telling Employees He Hasn’t “Walked the Talk,” Cisco’s John Chambers Leans In on Women in the Workplace Issue

4.) LinkedIn to Buy Pulse Newsreader for More Than $50M (and here’s what they could do with Pulse)

5.) How One Boring Company Pulled Off the Perfect SXSW Troll

6.) Crowdfunding for a Cause: Nonprofits Can Now Hold Fundraisers on Crowdtilt

7.) IBM Makes a Big Bet on OpenStack in the Cloud

8.) Yahoo CEO Marissa Mayer Gets a Million-Dollar Bonus After Six Months on the Job

9.) Nokia: A Microsoft Surface Phone Could Screw Us

10.) Outbox: Yahoo Mail Head Sharma Leaves Company (Update: And he has now joined Disney’s online parks division)

For more of the week in review, please follow us on Facebook and Twitter.

As most of the free world knows by now — from the ubiquitous media coverage that Facebook COO Sheryl Sandberg and her new book, “Lean In: Women, Work, and the Will to Lead,” has gotten of late — there are some nagging issues of women in the workplace.

That was also underscored by the huge debate that arose over Yahoo CEO Marissa Mayer’s new rule for the Silicon Valley Internet giant that eliminated work-from-home employees.

Now, Cisco CEO John Chambers is weighing in, after a meeting with Sandberg last week, ordering each of his top managers to come up with new women-focused initiatives and put them into their development plans.

More interestingly, in an internal email I obtained, he also noted that his own leadership in the area had been lacking.

“While I have always considered myself sensitive to and effective on gender issues in the workplace, my eyes were opened in new ways and I feel a renewed sense of urgency to make the progress we haven’t made in the last decade,” wrote Chambers.

He pointed out that only one-fourth of the networking giant’s employees and top execs are women, and only 20 percent out of one million networking academy students are women. Currently, Cisco’s highest-ranking woman is Padmasree Warrior, its CTO and strategy officer, and it has three women board members.

Still, wrote Chambers:

“After reading Lean In and listening to Sheryl, I realize that, while I believe I am relatively enlightened, I have not consistently walked the talk … What we have been doing hasn’t worked, and it is time to adjust.”

Here’s the whole memo:

From: John Chambers
Date: March 8, 2013, 6:21:49 PM PST
To: John Chambers
Subject: International Working Women’s Day … Cisco Resolution

To my leaders:

I had the opportunity yesterday to discuss Sheryl Sandberg’s new book Lean In with Sheryl and a group of my CEO peers. While I have always considered myself sensitive to and effective on gender issues in the workplace, my eyes were opened in new ways and I feel a renewed sense of urgency to make the progress we haven’t made in the last decade.

The data is startling. Women hold less than 14% of CEO positions, 17% of board seats globally, and 18% of congressional officials … and these numbers have not changed in a decade. At Cisco, less than 25% of our employees — and our leaders — are women. Only 20% of our current one-million networking academy students are women.

Today is International Working Women’s Day, and I want us, the leaders of Cisco, to see this as a leadership moment. Without realizing it, we operate every day with gender stereotypes and biases, many of which we do not realize. After reading Lean In and listening to Sheryl, I realize that, while I believe I am relatively enlightened, I have not consistently walked the talk. I think each of you, on reflection, will identify opportunities to operate at a new level with your women employees, leaders, customers, partners, and peers. I believe we — together — need to drive a fundamental culture change and it is up to us as leaders to make this change happen. What we have been doing hasn’t worked, and it is time to adjust.

I have two specific asks for each of you: 1) please read the copy of Lean In you will be receiving shortly, before we get to the SVP/VP off-site and 2) determine 3-4 specific things you will do differently and detail those commitments in your development plan and if you need help, please contact Sandy Hoffman, Chief Diversity Officer.

I know each of us will have a different explanation and a different solution, and there is power in the diversity of those ideas in driving change. I am asking two champions — Chuck Robbins and Kelly Kramer — to take a leadership role in moving us forward. I will ask them to report to the Operating Committee every quarter on the progress we have made and the action plans in place.

I think Sheryl says it best: “We can no longer pretend that biases don’t exist, nor can we talk around them … the result of creating a more equal environment will not just be better performance for our organizations, but quite likely greater happiness for all.”

Kath Weslock, Chief Human Resources Officer and I look forward to discussing this topic with many of you. We believe we have an opportunity to make a tremendous difference, and in so doing benefit our people, our culture, our company and, just maybe, the world.

John

I had a short conversation with Chambers last night, shortly after the earnings report was released. Here are the highlights:

AllThingsD: John, you were just on CNBC a little while ago, talking about how some of your customers are seeing a slow start to 2013, but generally feeling positive. Your shares moved after-hours in reaction to that, and people tended to focus on that. Can you unpack what you meant?

Chambers: I talked about a lot of positive things, and I think sometimes people will take one element and focus on it. When you have record earnings and record revenues, and you’ve done that for eight quarters in a row, the key takeaway about the quarter has to be that our vision and strategy is working. Many times — not entirely — but many times, we’re out-executing the vast majority of our peers. The second element is not that Cisco is off to a slow start in 2013, it’s more that 2013 is off to a slow start economically in terms of what our customers are saying to us. I believe, based on what they are telling us and based on our order trends, that it appears to be, barring government mis-execution in a big way, I think we can handle a short-term pause. But, barring a big economic surprise, it’s just going to be a slowly improving year. My customers are saying it’s looking like a better year than they’ve seen in a couple years, and the trend is up and to the right, but it is coming off a slow base. So I think we’ll see relatively slow GDP growth in the U.S.

That seems to be the sentiment right now.

Yeah, most of my customers are saying they see a point and a half of GDP growth in the first half of the year, and unfortunately that means they’ll spend to that. On the other side, our enterprise and commercial accounts are showing two quarters in a row of really solid growth. And they’re usually a good indicator two to four quarters out.

So would you say you’re expecting something of an acceleration later in the year?

I would use a different phrase for it. I’d say cautious optimism. There are some very smart people who are very negative not just on Europe but on the U.S. So our eyes are wide open to the fact that we may be of the minority view. But we have the advantage of seeing our order patterns among our customers, and being able to talk to most of the government global business leaders around the world.

What’s working and what’s not for Cisco right now?

I think what’s working are the vision and the strategy of the role of the network, and beginning down the path of being the No. 1 IT player in the world. This quarter was another proof point of that, especially in the data center, but also in software. Secondly, what’s working is key technology trends, such as cloud and data center, mobility and video — all had very good quarters. What’s not working is that we’d like to see things growing faster on a global basis. Assuming we continue to be a reasonably good barometer of the global economy, we’d like to see these things growing a little faster.

How do you feel about the competitive landscape?

We love to compete, and we try to always compete with class. And we compete to win the market transitions. So let’s look at those. In the transition in the cloud and the data center, we’re challenging the incumbents that have been there for two decades. Let’s face it, servers are a commodity. And yet our servers get a dramatic premium, and they are tied very tightly to a switch. And we’re winning with a 65 percent growth rate in a market where our peers are flat or growing in low single digits. The second thing that is working is mobility. It was an Achilles’ heel about two or two and a half years ago. Now we’re the leader in most segments of mobility that have profits. So mobile edge, mobile backhaul, mobile packet edge, wireless LANs, small-cell, integrating it all together with wired capability. And collaboration tied to it, it really feels good to win there. The third thing would be in video. We’re making a pretty good transition from a set-top box where we’re making very little profit, and we’re starting to walk away from deals where people won’t pay for an architectural play; we just don’t bid on it. And, in spite of that, we’re up about 20 percent, mostly on software from NDS, so the market is going where we want it to go. It’s too early to say how far along we are in becoming the world’s No. 1 IT player, or the Internet of everything. I’d say a little bit of progress there, but it’s way too early in the ball game to say.

While the initial results beat expectations slightly, Chambers’s comments about a “slow start with steady improvement through the year,” made on CNBC, pushed the shares down by more than 2 percent in after-hours trading. He also said he expects market conditions to improve “at a much slower pace than we would like.” (See the video below.)

Cisco has often argued that its purchasing patterns tend to serve as an early warning sign of the health of the global economy, especially given its exposure to government spending both in the U.S. and around the world.

Cisco said it expects to earn between 48 cents and 50 cents per share in the next quarter and that it expects sales to grow by about 4 percent to 6 percent. It also said it expects gross margins, an important indicator of profitability, to be in the range of 61 percent to 62 percent.

Here’s the CNBC video.

And this is the point at which I pick a song that characterizes Cisco’s earnings. Given Chambers’s language earlier about a “slow start” to the year, and combined with Cisco’s new marketing campaign with the tag line “Tomorrow Starts Here,” I mashed up those two things and came across the song “Future Starts Slow” by The Kills. Enjoy.

Cisco reported earnings of 51 cents per share on revenue of $12.1 billion. The results beat the consensus expectation of Wall Street analysts surveyed by Thomson Financial of 48 cents on sales of $12.06 billion.

I’ll have more as I get a closer look at the numbers.

Here’s Cisco’s original announcement:

Cisco Reports Second Quarter Earnings
SAN JOSE, CA–(Marketwire – February 12, 2013) – Cisco (NASDAQ: CSCO)

Q2 Net Sales: $12.1 billion (increase of 5% year over year)
Q2 Earnings per Share: $0.59 GAAP (includes tax benefits of $0.17); $0.51 non-GAAP (includes a tax benefit of $0.01)
Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its second quarter results for the period ended January 26, 2013. Cisco reported second quarter net sales of $12.1 billion, net income on a generally accepted accounting principles (GAAP) basis of $3.1 billion or $0.59 per share, and non-GAAP net income of $2.7 billion or $0.51 per share.

GAAP net income and GAAP earnings per share for the second quarter of fiscal 2013 included total tax benefits of approximately $926 million or $0.17 per share, related to a tax settlement with the Internal Revenue Service and related to the reinstatement of the U.S. federal research and development (R&D) tax credit on January 2, 2013. Non-GAAP net income and non-GAAP earnings per share for the second quarter of fiscal 2013 included a tax benefit of approximately $60 million or $0.01 per share as a result of the reinstatement of the U.S. federal R&D tax credit on January 2, 2013.

“Cisco delivered record earnings per share this quarter and record revenue for the 8th quarter in a row in a challenging economic environment. We continue to drive the innovation, quality and leadership our customers expect, and we remain focused on consistent returns to our shareholders,” said John Chambers, Cisco chairman and chief executive officer.

“In terms of the future, we are making solid progress towards our goal of becoming the #1 IT company in the world. As new markets grow and are created, such as the Internet of Everything, it’s very easy to see how the intelligent network is at the center of that future. Our customers already understand that Cisco has the architectures, solutions and services to best help them deliver the business results they need and we are honored to work with them and serve them each and every day.”

Net sales for the first six months of fiscal 2013 were $24.0 billion, compared with $22.8 billion for the first six months of fiscal 2012. Net income for the first six months of fiscal 2013, on a GAAP basis, was $5.2 billion or $0.98 per share, compared with $4.0 billion or $0.73 per share for the first six months of fiscal 2012. Non-GAAP net income for the first six months of fiscal 2013 was $5.3 billion or $0.99 per share, compared with $4.9 billion or $0.90 per share for the first six months of fiscal 2012.

A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 6.

Cisco will discuss second quarter results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://investor.cisco.com.

Cash and Cash Equivalents and Investments

Cash flows from operations were $3.3 billion for the second quarter of fiscal 2013, compared with $2.5 billion for the first quarter of fiscal 2013, and compared with $3.1 billion for the second quarter of fiscal 2012.
Cash and cash equivalents and investments were $46.4 billion at the end of the second quarter of fiscal 2013, compared with $45.0 billion at the end of the first quarter of fiscal 2013, and compared with $48.7 billion at the end of fiscal 2012.
Dividends and Stock Repurchase Program

During the second quarter of fiscal 2013:

The combination of cash used for dividends and common stock repurchases under the stock repurchase program totaled approximately $1.2 billion.
Cisco paid a cash dividend of $0.14 per common share, or $743 million.
Cisco repurchased approximately 25 million shares of common stock under the stock repurchase program at an average price of $20.15 per share for an aggregate purchase price of $500 million. As of January 26, 2013, Cisco had repurchased and retired 3.8 billion shares of Cisco common stock at an average price of $20.34 per share for an aggregate purchase price of approximately $76.9 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under this program is approximately $5.1 billion with no termination date.
“We delivered another solid quarter achieving profitable growth which contributes to increasing shareholder value over the long term,” stated Frank Calderoni, Cisco executive vice president and chief financial officer. “We are executing consistently, and we remain confident with our financial strategy while capitalizing on strategic investment opportunities to help drive our continued leadership in the industry.”

Select Global Business Highlights

Cisco announced and completed the acquisition of privately held Cloupia, Inc., a software company that automates converged data center infrastructure, allowing enterprises and service providers to simplify the deployment and configuration of physical and virtual resources from a single management console.
Cisco announced and completed the acquisition of privately held Meraki, Inc., a leader in cloud networking offering midmarket customers easy-to-deploy, on-premise networking solutions that can be centrally managed from the cloud.
Cisco announced and completed the acquisition of privately held Cariden Technologies, Inc., a supplier of network planning, design and traffic management solutions for telecommunications service providers.
Cisco announced and completed the acquisition of BroadHop, Inc., a provider of next-generation policy control and service management technology for carrier networks worldwide.
Cisco announced the investment of $6 million in the venture capital fund Monashees Capital, a leading Brazilian VC focused on Internet companies and online education.
Belkin announced its intent to acquire Cisco’s Linksys product line.
Cisco unveiled its new “Internet of Everything” global integrated marketing campaign, with a message that connecting people, process, data and things will make the network more valuable than ever.
Cisco Innovation

Cisco unveiled Videoscape Unity™, its new and expanded Videoscape™ video services delivery platform, empowering service providers and media companies to deliver new intuitive and synchronized multiscreen video experiences.
Cisco announced new solutions under the Cisco Unified Access™ umbrella that simplify network design by converging wired and wireless networks.
Cisco introduced Cisco StadiumVision® Mobile, a solution that delivers live video to mobile devices to create an entirely new fan experience in sports and entertainment venues.
Cisco introduced its advanced Wi-Fi location data analytics platform to help businesses enhance customer experiences and create new monetization opportunities to meet the needs of the growing number of connected consumers.
Cisco announced two new connected health offerings, Connected Health solutions and HealthPresence® 2.5, designed to meet the increasing need in healthcare for software and services that help enable efficient, convenient, high-quality patient care, and more collaboration across the healthcare continuum.
Select Customer Announcements

Cisco announced that Turkiye Is Bankasi (Isbank), the largest bank of Turkey, deployed a Cisco® Borderless Networks and Collaboration infrastructure to enhance business agility, speed product and service development, and better serve its customers.
ME Bank in Australia selected a Cisco and NetApp FlexPod® for VMware solution to help transform its information technology and operational excellence functions and to accelerate the speed with which it can introduce new business applications and services to customers.
SingTel announced that it is the first service provider in the Asia-Pacific region to globally deploy Multiprotocol Label Switching-Transport Profile (MPLS-TP) technology for its ConnectPlus E-Line service, providing its multinational corporation customers with scalable high-speed connections worldwide.
Xerox selected Cisco Unified Computing System™ to deliver its cloud-based global managed print services.
Cisco announced that Eastlink, a leading telecommunications service provider in Canada, is using Cisco Videoscape™ to power its new mobile video platform, Eastlink To Go, designed to deliver new consumer experiences anytime, anywhere.
Cisco announced that Telefonica Global Solutions, part of the Telefonica Group, a leading global provider of telecommunication services for fixed and mobile carriers, ISPs and content providers, selected Cisco for its enhanced Internet Protocol Next-Generation Network.

The company intends to change that, at least in one fashion, with the launch of a significant branding campaign combining broadcast, print, Web, social and augmented reality that gets under way today and should run well into next year. CEO John Chambers previewed the “Tomorrow Starts Here” Now campaign at Cisco’s annual meeting with financial analysts in New York on Friday.

The idea appears to be to make networking instead of computing the most important part in the narrative of the Internet’s next phase in growth and evolution. For years, computing has seemed the central player in the march of technology of which the Internet is the logical end result.

Cisco has cleverly attempted to hijack and then enhance the tired-out phrase “Internet of Things,” and has changed it to “Internet of Everything,” implying that everything worth knowing anything about, from traffic lights to trees, will be connected to the Internet in some fashion.

The new campaign — a broadcast spot can be seen below — was created by advertising agency Goodby Silverstein & Partners, whose clients include Yahoo, Netflix and TD Ameritrade. It’s also known for doing some high-concept tech ads, like this spot for Sprint connecting 4G cell phones to the wheel, the first supersonic flight and other great scientific firsts in history.

I talked to Cisco’s chief marketing officer, Blair Christie. She said it’s kind of a culmination of a year-long effort to rethink the Cisco brand. You saw some of it earlier this year with bits like the “broken robot” ad, in which a manufacturing robot breaks down, but then gets fixed by another robot, thus allowing the assembly line to “fix itself.”

“From a marketing perspective, the story has shifted toward the value of connections,” Christie told me in an interview last week.

The piece that will get the most attention is the “augmented reality” part, which harnesses an iPhone app that allows people seeing print versions of the campaign to drill down and get to know Cisco more. You can, depending on how you navigate through the app, see several videos or download some white papers. The point, Christie says, is that Cisco is a complex company, and even the masters of the advertising industry can’t tell the whole thing in 60 seconds. More about it and the rest of the campaign here.

Anyway, here’s the video part that I can show you. That Cisco is taking the initiative in seeking to tell its own story better is a good sign. It has suffered of late from the appearance of being an older company that has lost a lot of its mojo. We’ll see if this can help get some of it back.

Canada? Right. Canada. Recall that Chambers has long been a vocal critic of a U.S. policy that taxes corporate profits at 35 percent. Because of this policy, and because companies have a fiduciary responsibility to their shareholders to use their cash in the least-costly manner possible, companies like Cisco, Apple, Microsoft, and others have tended to leave what cash they generate invested outside the U.S. until such time as they can repatriate it at a lower tax rate.

Chambers took this argument to mainstream American TV viewers in an interview with CBS News correspondent Lesley Stahl on “60 Minutes” last year. Chambers told Stahl that without a lower rate, Cisco would be forced to invest more resources overseas, acquire more non-U.S. companies, and so on.

And he’s done what he said. For just one example, look at NDS, the Israeli video technology company for which it paid $5 billion earlier this year.

Yesterday, Chambers made a point of singing the praises of Canada, where he says Cisco will be taking more of its $45 billion in cash for the purpose of making investments in the coming year. First he said it to Maria Bartiromo on CNBC (see video below), and then on Cisco’s earnings conference call with analysts. And then he said it to me.

Here he is saying it to Bartiromo, but with a new twist: Cisco may take some of its bankroll to Canada, which he called “the easiest place in the world to do business. … We need to learn from them.”

Later on, Chambers repeated similar sentiment on Cisco’s conference call. Answering a question from Goldman Sachs analyst Simona Jankowski about the business environment in the face of the fiscal cliff circus that has everyone in Washington all riled up, Chambers quickly pivoted to U.S. tax policy.

I personally think the fiscal cliff, we’re going to work through that probably with little bit of saber-rattling on both sides. We’re looking more towards the tax policy and if the government is able to instill the confidence in business that allows and ready to invest.

If I would look at one model, we have to look at very carefully around the world it’s Canada, the easiest place to do business. It doesn’t matter which party is in power, even their provinces, their states. When the national government, Prime Minister Harper gets it the leaders in Ottawa will get it, they drive down through and make it very easy do business there. And you’re going to see us grow our business there as well as invest overall.

I asked Chambers about his sudden love of all things Canadian in a brief interview last night. “They have a great education system, and a predictable tax system,” he said.

It’s true: Canada has lowered its federal corporate tax rate to 15 percent, soundly beating the 35 percent rate in the U.S., which is now the world’s highest. Even President Obama is on board with the idea that that rate should be cut. But Chambers has $45 billion burning a hole in his pocket. And from all indications, business is looking up after a few tough years.

So here’s the second of my quarterly song selections, the additional song I promised yesterday: “Blame Canada,” from the “South Park” movie. Naturally.

So what does CEO John Chambers see for 2013? Having just reported quarterly earnings that beat the expectations of analysts, he told me in a brief interview that if you set aside sales to the federal government, which aren’t very good, other sales in the U.S. are looking promising.

Here’s how sales to different segments of the U.S. market break down: Sales to the federal government were down by 15 percent. But sales to U.S. service providers were up by 13 percent. Sales to U.S.-based enterprises were up by 9 percent, and sales to commercial customers were up by 5 percent.

What’s it all mean? “Take out government and you start to have a robust run rate that looks like something good is happening in the U.S.,” he said.

What would make him more confident about this “something good?” Another quarter of the same thing, he said.

So now it’s time for me to pick the song, the only I always pick after Cisco reports earnings. I’ve actually picked two, but will post the other tomorrow morning. The first is “Going the Distance,” the training theme from the original “Rocky.” I’d like to think that if Chambers is right, the U.S. economy is in training to do something unexpected. Something good.

Cisco reported a 48 cents per-share profit, up 12 percent from this time last year, on sales of $11.9 billion, which were up 6 percent versus last year. Shares rose by more than 6 percent in after-hours trading after the results were reported.

CEO John Chambers was just on CNBC a few minutes ago and said that sales in Europe and to the U.S. federal government continue to be sluggish. He expects improvement in China, Japan and the Asia Pacific region.

He also touched on his favorite policy question: What will Cisco do with its huge pile of $45 billion in cash? Much of it remains stashed away in overseas banks, out of the reach of U.S. taxing authorities. Chambers told CNBC that he’s considering making more investments overseas, and specifically mentioned Canada, saying the government there is more “favorable.”

Here’s Cisco’s original release:

Cisco Reports First Quarter Earnings
SAN JOSE, CA–(Marketwire – Nov 13, 2012) – Cisco (NASDAQ: CSCO)

Q1 Net Sales: $11.9 billion (increase of 6% year over year)

Q1 Net Income: $2.1 billion GAAP (increase of 18% year over year); $2.6 billion non-GAAP (increase of 11% year over year)

Q1 Earnings per Share: $0.39 GAAP (increase of 18% year over year); $0.48 non-GAAP (increase of 12% year over year)
Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its first quarter results for the period ended October 27, 2012. Cisco reported first quarter net sales of $11.9 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.1 billion or $0.39 per share, and non-GAAP net income of $2.6 billion or $0.48 per share.
“We delivered record results this quarter — with revenue growth of 6 percent and strong earnings per share growth — demonstrating our vision and strategy are working,” said John Chambers, chairman and chief executive officer, Cisco. “Our innovation engine, operational discipline and on-going evolution are enabling us to differentiate in the market.”

Chambers continued, “Cisco is at the center of the major market transitions — cloud, mobility, video — and yet we believe the largest market transition lies ahead of us, as the Internet of Everything becomes a reality. Cisco has the unique ability to turn information that will flow across networks into new capabilities and richer experiences. The Internet of Everything will create unprecedented possibilities for businesses, individuals and countries, and Cisco is poised to lead and fully maximize the opportunities of this evolution.”

GAAP Results

Q1 2013 Q1 2012 Vs. Q1 2012
Net Sales $ 11.9 billion $ 11.3 billion 5.5 %
Net Income $ 2.1 billion $ 1.8 billion 17.7 %
Earnings per Share $ 0.39 $ 0.33 18.2 %

Non-GAAP Results

Q1 2013 Q1 2012 Vs. Q1 2012
Net Income $ 2.6 billion $ 2.3 billion 10.6 %
Earnings per Share $ 0.48 $ 0.43 11.6 %

A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 5.
Cisco will discuss first quarter results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://investor.cisco.com.
Cash and Cash Equivalents and Investments
Cash flows from operations were $2.5 billion for the first quarter of fiscal 2013, compared with $2.3 billion for the first quarter of fiscal 2012, and compared with $3.1 billion for the fourth quarter of fiscal 2012.
Cash and cash equivalents and investments were $45.0 billion at the end of the first quarter of fiscal 2013, compared with $48.7 billion at the end of the fourth quarter of fiscal 2012.
Dividends and Stock Repurchase Program
During the first quarter of fiscal 2013:
The combination of cash used for dividends and common stock repurchases under the stock repurchase program totaled approximately $1.0 billion.
Cisco paid a cash dividend of $0.14 per common share, or $744 million.
Cisco repurchased 15 million shares of common stock under the stock repurchase program at an average price of $16.44 per share for an aggregate purchase price of $253 million. As of October 27, 2012, Cisco had repurchased and retired 3.8 billion shares of Cisco common stock at an average price of $20.34 per share for an aggregate purchase price of approximately $76.4 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under this program is approximately $5.6 billion with no termination date.
“Once again, we delivered strong financial performance with continued execution on our long-term strategy of growing profits faster than revenue and driving long-term value to our shareholders,” stated Frank Calderoni, executive vice president and chief financial officer, Cisco. “We remain confident in our financial strategy and in our ability to consistently execute moving forward.”
Select Global Business Highlights
Cisco announced the completion of its acquisition of NDS Group Ltd., a leading provider of video software and content security solutions that help service providers and media companies to securely deliver and monetize new video experiences.
Cisco and NBC Olympics provided a personalized, interactive, multiscreen Olympics experience at the 2012 London Olympic Games to select users at event venues and accommodations using Cisco® Videoscape™.
Cisco and Citrix announced a significant expansion of their successful desktop virtualization partnership into three strategic areas: cloud networking, cloud orchestration, and mobile workstyles.
Cisco and EMC announced further collaboration to help accelerate IT transformation by providing customers with choice and flexibility via “three paths to the cloud” — custom-design infrastructure, validated reference architectures, and pre-integrated converged infrastructure.
Cisco Innovation
Cisco introduced an expanded and enhanced content delivery network portfolio, branded as the Cisco Videoscape Distribution Suite.
Cisco introduced a new wave of security solutions designed to fortify data centers against the threats they face in moving toward more consolidated and virtualized environments, while also helping businesses to take advantage of new cloud-based models.
Cisco announced new elastic core networking capabilities that help service providers to cost-effectively launch and scale revenue-generating services within minutes instead of months.
Cisco introduced a new Unified Access solution, a highly secure network infrastructure based on one policy source and one management solution for the entire network, to help organizations quickly respond to new business opportunities while managing rapidly changing network demands.
Cisco introduced a full suite of solutions for the SAP HANA platform built on the Cisco Unified Computing System™ allowing customers to experience benefits — realtime data analytics and data warehousing — in seconds instead of hours.
Cisco unveiled enhancements to its collaboration portfolio, delivered via public, private or hybrid cloud models.
Select Customer Announcements
Miami International Securities Exchange, LLC announced plans to offer a trading platform built on Cisco’s ultra-low latency intelligent network infrastructure and designed from the ground up to address the highly secure, functional and high performance demands of the derivatives market.
Cisco and Manila Electric Company (Meralco), the Philippines’ largest distributor of electrical power, announced a collaboration to provide reliable computing and networking infrastructure as a foundation for operations on a smart grid.
Cisco, Barcelona’s City Council, and GDF SUEZ agreed to launch, and agreed on the criteria for the creation of, the City Protocol (the first certification system for smart cities) that can be put into practice by any city in the world.
SBB-Telemach Group, the largest pay-TV platform in southeast Europe providing television, Internet, and telephony services, selected the Cisco Videoscape-capable Personal DVB Set-Tops (PDS) Series and Cisco Integration Services to deliver next-generation television services.
Cisco and the United Nations (UN) Office for the Coordination of Humanitarian Affairs (OCHA) reached an agreement that will allow any United Nations organization to access Cisco’s networking technology solutions for emergency communications assistance during UN disaster relief missions.
Barclays Center will feature Cisco’s Connected Sports and Entertainment solutions — Connected Stadium Wi-Fi and StadiumVision™ to deliver a next-generation fan experience and make this venue one of the most technologically advanced arenas in the world.
Cisco announced that it has been selected by NBN Co. to provide equipment for its national data connectivity network, which is part of the Australian National Broadband Network.
Itaú BBA will invest $2 million in technology to expand its Latin American businesses and has selected Cisco solutions for its IT environment, including servers, networking, increased access security and IP telephony systems.

Credit Suisse analyst Paul Silverstein, in a Nov. 9 note to clients, says he expects near-term weakness in Cisco’s results today, but has a more positive view looking ahead.

“We expect relatively soft results and outlook based on the quarter’s operating results and outlook from other communications equipment suppliers, tech peers and our own industry checks,” Silverstein wrote. “In particular, we expect a relatively soft U.S. enterprise to be the primary issue. At this point, however, we think shares already discount this outlook.”

Cisco is managing the things it has under its own control relatively well, Silverstein says. It has, he writes, improved its position in enterprise switching and in selling routers to service providers, though demand is still weak. Trading at $16.82 this afternoon with about an hour to go before today’s close, the shares are down about 10 percent this year.

A large group of tech luminaries — including LinkedIn’s Reid Hoffman, Path’s Dave Morin, JLab’s Judy Estrin, Dropbox’s Drew Houston, Craigslist’s Craig Newmark and Box’s Aaron Levie — are part of the launch of a series of online videos today aimed at talking up U.S. innovation and, in the process, touting the reelection of President Barack Obama.

The slick “Innovator Series” of about two dozen videos comes out of Technology for Obama — or T4O, for short — and plans to feature daily short interviews with entrepreneurs and tech execs. Along with touting the need for innovation, the group talks about their “personal lessons of success and failure,” which then sidles politically into “their views on why they believe President Obama is the right leader for increasing innovation and moving the country forward.”

The patter is in that vein, such as this quote from Hoffman:

“Innovation is our key differentiator in terms of competitive business model of the U.S. in the world. We need to continue to attract the best people to build interesting businesses, products, services here.”

CNET co-founder and former CEO Shelby Bonnie, who recently joined investment firm Allen & Co., did most of the interviews for the T4O effort.

“Each of us was looking at what we could do and found that this group had a deep-seated belief in the importance of innovation and ability to innovate in this country,” he said of the video offerings, which were shot mostly out of the Obama campaign offices in San Francisco. “The consistent theme we wanted to get out is that President Obama gets that and believe in innovation.”

No word yet on what GOP geeks — such as Hewlett Packard’s Meg Whitman or Cisco’s John Chambers — are up to for former Gov. Mitt Romney — but until then, here is a sizzle reel of the T4O interviews:

]]> http://allthingsd.com/20121019/how-many-techies-does-it-take-to-elect-a-president-t4o-launches-innovator-series-videos-for-obama/feed/ 0 http://allthingsd.com/20121008/why-america-is-really-worried-about-huawei/ http://allthingsd.com/20121008/why-america-is-really-worried-about-huawei/#comments Mon, 08 Oct 2012 21:35:42 +0000 Arik Hesseldahl http://allthingsd.com/?p=258060 Concerns about the potential for a national security threat posed by the Chinese networking concern Huawei have been simmering at a low intensity for some time. They burst out into the full glare of publicity today with the release of a report by the House Intelligence Committee saying that Huawei and another Chinese telecom-equipment concern, ZTE, pose sufficient security risks that government agencies should avoid buying their equipment.

There aren’t a lot of specifics to get excited about in the 52-page report, though there are presumably some items of interest in classified portions of the report not released to the public. Huawei has had a difficult time showing to the satisfaction of Western sensibilities that its ties to China’s People’s Liberation Army are severed. If ordered, the thinking goes, Huawei gear could be turned into a valuable espionage tool in the event of war with the U.S. or another country.

The concerns on the part of U.S. lawmakers and the national security establishment are certainly valid, but not for the reasons you think. While Chinese actors have certainly been among the most active when it comes to attacking the networks of large U.S. corporations and stealing their secrets, the U.S. and its allies fret about letting Huawei in because they know from their own experience how imported electronics can be turned into a weapon of espionage and outright sabotage.

Remember that it was intelligence agencies of the U.S., in partnership with Israel, that turned deep knowledge of the numerous variants of Microsoft’s Windows operating system combined with specialized knowledge of industrial control systems to create the Stuxnet worm that damaged the Iranian nuclear research program. Later discoveries included other U.S.-Israeli cyber weapons called Flame and Gauss. Taken together, they amount to evidence that the countries had mounted a less-than-covert military campaign against Iran that could in time have significant unintended consequences.

Prior efforts include a largely forgotten 1982 campaign of electronic sabotage against the natural gas pipeline being built by the Soviet Union that caused so large an explosion that U.S. military forces briefly thought it was an early sign of a nuclear attack. The episode was documented in the book “At the Abyss: An Insider’s History of the Cold War” by Thomas Reed, the late former secretary of the Air Force under President Reagan.

Another incident, this one not as well documented but the subject of a great deal of informed speculation, concerns a 2007 Israeli air strike against what was at the time a suspected nuclear weapons research facility in Syria. A report by the IEEE Spectrum the following year traced reports that a French chip company that supplied the manufacturer of Syrian radar defense gear included a “kill switch” that allowed Israeli bombers to carry out their attack undetected.

So it’s not from out of nowhere that such national security concerns arise about a Chinese telecom concern.

One fundamental failure of all this official hand-wringing is that it neglects the fact that many if not most of the components, with the exception of certain higher-value chips like those from Intel, are manufactured in China. Cisco Systems and Juniper Networks in the U.S., Alcatel-Lucent in France and Ericsson in Sweden, all use Chinese-made parts and carry out at least some portion of the final assembly of their equipment in China.

Huawei certainly hasn’t done itself any favors. While its most senior U.S. employee described the company as “an open book” in a surprisingly short segment on CBS’s “60 Minutes” last night (see the video below), its founder and chief executive, Ren Zhengfei, has never sat for an interview with a Western media outlet. And the precise ownership of the company’s shares are murky. U.S. regulators have prevented it from making certain acquisitions, and in Australia it was blocked from bidding on portions of a project to build a national broadband Internet network.

It hasn’t gotten to be the world’s largest telecom equipment concern for nothing. Wireless phone networks in Africa rely heavily on inexpensive gear sold by Huawei. There are suspicions about its dealings in this area too, though they are mostly economic. Huawei has a history of undercutting Western rivals in competitive bids by as much as 5 percent to 15 percent, raising suspicion that it is the benefactor of state-sponsored subsidies. However, it’s also to the benefit of these rivals to stoke the national security concerns as much as possible.

All told, it’s not as though there is no reason to be suspicious of Huawei, if only because the U.S. and its allies know too well from their own actions in recent years about the potential for electronic espionage, surveillance and warfare.

For its part, Huawei defended itself and attacked the report in a response today (read it in full here). The company said the committee’s report, an 11-month effort, “failed to provide clear information or evidence to substantiate the legitimacy of the Committee’s concerns” and “appears to have been committed to a predetermined outcome” and “employs many rumors and speculations to prove non-existent accusations.”

Without having read the classified portions of the report, which are said to contain more specifics — it mentions only vague instances of “beaconing,” which is intended to mean sending data back to China — it’s hard to argue with Huawei’s position.

Nor is it easy to dismiss the committee’s fears out of hand. Which brings us to the possible unintended result of all this: Might China respond with its own restrictions against U.S. telecom firms like Cisco and Juniper? Is this the first shot of a telecom trade war? We’ll see.

If that happens, expect Cisco to be hurt more than Huawei. U.S. sales account for only 4 percent of its overall revenue, whereas Cisco’s operations in Asia, the Pacific Rim and China account for more than 16 percent, and China was its second fastest-growing market in that region after Japan.

Huawei-ZTE Investigative Report (FINAL)

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