Cisco (NASDAQ: CSCO) believes so strongly in its plans to continue to sell routers and video technology that it would not change its strategy, even in a recession. The company plans to take the long view and believes that sticking to its programs will produce the best results over the next five years.
It is nice to know that someone in corporate America thinks enough of their business not to change it every quarter. "I don't make any decisions on the next quarter or the next year. I make my decisions three to five years out so I do not adjust my strategy based on what spending's going to be next quarter or three quarters. I make my decisions on three to five years," John Chambers, the company's CEO told Reuters.
Cisco's success will thus rise and fall on the growth of broadband and video use by companies and consumers. It is not an entirely safe bet. Cable companies are seeing some moderation in growth rates. It is not clear the dozens of new video technologies will catch on.
Web traffic is likely to keep growing, which will help Cisco's core router business, but it would not be surprising if a global economic slowdown hit communications capital spending hard. Then the question is whether Cisco is willing to face some very hard quarters or will it cut costs like most companies do
Douglas A. McIntyre is an editor at 247wallst.com.
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