Originally created 08/16/98

Network giant Cisco has strategy to continue growth



SAN JOSE, Calif. -- John Chambers believes in the power of networks -- both personal and high-tech ones.

In 1991, shortly after Mr. Chambers quit as a senior vice president at Wang Laboratories Inc., he sent out a couple hundred resumes, then waited for the phone to ring. He got one interview.

"The first month was kind of humbling," he conceded.

Ultimately, he was saved by a network of friends and former colleagues who knew there was more to Mr. Chambers than that resume conveyed.

They introduced him to a modest company that built the plumbing for data networks, a firm called Cisco Systems Inc., which at the time had revenue of about $70 million a year.

That was long before the Internet craze, years before ordinary people chatted about the speed of the electronic modems that connected their computers to the global computer network as confidently as they described the horsepower of their cars.

These days, Cisco and Mr. Chambers, who became president and chief executive in 1995, are the darlings of Silicon Valley.

Cisco reported its fiscal 1998 results last week, posting a profit of $1.35 billion, or $1.26 a share, on sales of $8.5 billion, which cheered investors. Less than a month ago, Cisco joined an elite group of fewer than two dozen companies whose value as calculated by Wall Street has exceeded $100 billion.

Mr. Chambers and Cisco are the advance guard of the next wave of business and technology. The future of tech, they believe, is not about computing power -- it's about communicating.

The electronic gizmos that people will use to talk to one another will become as varied and unique as trinkets on a charm bracelet.

What will unite them, however, will be standardized communications networks. If Mr. Chambers has his way, Cisco's technology will reside at all the critical junctures, shuttling data from one place or device to the next.

Make no mistake -- Cisco faces tough competition as it tries to expand its business by creating the building blocks for high-speed, sophisticated pathways that fuse together data, voice and video signals over a single network.

Data-networking companies such as the smaller Ascend Communications Inc. are eagerly trying to learn how to provide technologies as reliable as the telephone network, while longtime telecommunications giants such as Lucent Technologies Inc. and Northern Telecom Inc. are scrambling to build up their data-networking muscles.

To maintain an edge, Mr. Chambers and Cisco aren't just selling new technology -- they are pushing a new way of doing business based on the Internet.

Here's the pitch: Don't just become a Cisco customer, become a "partner."

A partner buys Cisco's products and also gets a kind of consulting service thrown in for free: Cisco will show you how to run with the Internet pack, save money, get into new markets and generally flourish by using the power of networks.

Every networking company wants to build technology that will fuse the traditional telephone network with the new Internet technologies.

But even if the technology isn't ready, Mr. Chambers is ready with futuristic pictures that are as glossy as a layout on a living room in a decorating magazine.