If you get a chance, you can watch it all again. I do very much encourage dennis will be leading the interview but this is very much a participatory event. We will have plenty of time for westerns afterword so please be ready for questions after that so please be ready. Thank you all for being here. I will hand it over to dennis. It is a comparable time today in new york. Lets get right to it. You recently predicted that perhaps over the next 10 years some of the Biggest Technology companies will not be around. Tell us about who they are, when they are going to go down. [laughter] go right to it. Talk to us about that. It is a very real observation. If you look at hightech industry, if i were to take a step back my competitors from 15 years ago, not one of them exist s. Such as . Synoptics, cabletron, they have pulled out. 1015 years ago, it was much bigger than that. Ericsson, etc. They should have crushed us and yet we are the size of market cap and growth and people were read about us with juniper and others and yet will pulled away from them as well. It isnt that cisco i am talking about is how fast his industry is changing. Out of the big six ip players, three of us will not be relevant to our customers. You can say that as the Silicon Valley stuff where you move fast. If you look at the enterprise customers in this room, only 1 3 of you will be relevant in 20 years. You will as he transitions see transitions when you look at uber and what they did to the taxi industry and amazon with the challenges of walmart. You will see those types of transformation coming everywhere in the world. The nice thing about cisco, if we make this transition ourselves we will be in the , center of it. Connecting what would be 500 billion devices. People get excited and they feel threatened about it. They can buy some equipment. You have a booth out in the front, i am sure. Some businesses today, our are technology businesses. The decisions about what the business is is largely the coming technology decisions. We have a lot of ceos, tell us about that. That thing that is changing. Technology and Business Decisions are merging into one. How do you see it . All of us in the hightech industry has for decades, i. T. Should enable your business. In some ways, we did and in some ways do not achieve many of the business objectives. In the last 18 months, you have seen the attitude change. If you were to talk to the new ceo of walmart and describe some stuff as a Technology Company first and then retail. You are beginning to see American Express suddenly thinking entirely different in terms of the image and how technology will get a different interface and allow to move. But it is not just in this country. You are seeing countries around the world change at tremendous speed. Angela merkel talks about her country being a digital country. As with the key leaders in germany this past week and in france and the Prime Minister of france and looking at how to digitize the country to make a competitive for the future. Israel is probably the top hightech country in the world who went digital first, gdp growth, job creation, inclusion of minorities, healthcare education, movement of other cities. By the way cisco was the partner all the way through it. What it says is tied this together and these number of devices connected to the internet from 1000 to 500 billion, you will be in a good spot. How does a business person make decisions on when aims are moving at that pace and in that way . Traditionally, you turn to the cio and say educate me on this and make the decisions. That is not an option anymore. If i talk to ceos around the world, most believe they have to understand that technology is themselves. A key advisers a Business Leader to understand the technology opposed to the cio. If we and he or her does not make the transition, this is one where the cio has to change and the Business Leaders but the cio. The ceo will be irrelevant in five years . Is that important . There you go. If the ceo doesnt change, he or she will take the company down with him. You have to be quick on your feet. The people hiring in this room today, should they be left hiring for technological proficiency and more for technological proficiency among their Senior Management . First, our Education Group does not do a good job of repairing the skills we need. Go on. You have to think about how the newly young people in . If young people think . Is if you cannot communicate with the social capabilities and do not understand collaboration, you will not get the talent you need. What do i tried to do . I try to get people who understand the business we are after in understand the implications for it. Lets talk about the sales culture. Traditionally, cisco seems to be changing quite a bit. Can you give me an example or two of how you reach your customers . How Technology Quest how technology is one of the hardest transitions, we have to transform our Organization Service and sales. We are a tough sales team. We can sell routers well. I get excited. Most of you go [yawn] we have 18 product families where we are number one. Producing solutions and outcomes. Easy to say, hard to do. How to sit across the table from a leader of a Large Company and country and say your gdp can grow 1 3 . Do they say they do not believe it . I will bet you money on it. In no productivity from you can say productivity grew quite rapidly because i see and the missing productivity quotient. All of the spending from 19962014, we have not seen the productivity close to 1 3 , why should we believe it now . That it will really change . You have to catch the market transition is true. During the 1990s, you moved in connectivity and the internet came, directly and indirectly and went from 1000 devices connected to 6 billion. We did very good on collaboration at the top. We changed the supply chain. What you are about to see, youll connect the devices and think about it, 500 billion devices squared where this will go. The challenge is how do you get the right information at the right point in time to the right device to the right person to make the right decision . That is about architecture and transform your business prospects. You will have to change, through education, the same thing. How countries are run is about to change. When you see the Industry Leaders and wanting as a ceo and government leader, you have to have the instincts of was something fundamentally changes. Probably unfair because she is an engineer and talk in mexico and how does he achieve socially quality and the roles nextgeneration of the internet of everything, how does it transform each segment of this business . You do the same thing in germany and france and the u. K. And they get it, these are smart people. Can we fill a void where we can get people excited . Theres been a lot of money spent and people in this room have spent billions of dollars and maybe that will be the case they can get those sorts of results. A good way to sell stuff, people are looking at specific examples of why that should be the case. Lets go to a city transformation, barcelona. It is the top innovation city in europe. Basically, the mayor and vice mayor, interfacing the city. They outlined the goal of transforming their city. They are the only balanced budget in southern europe. They operate with a surplus and have 3 billion in savings over 10 years and networking. That would change how Public Transportation works and while Smart Buildings and will do paid parking. How long does it take . Another three years. All cisco, by the way. [laughter] and in terms of implementation. Lets go from there to hamburg. 25 billion a year. Not a bad. Everything will get connected. You only pick up your garbage when it needs to be picked up. You cannot do these in silos. You get your payback by combining all of the functions together, which is where people make mistakes and they try to get excited about one area. The way you get people comfortable is say you have references. You go to hamburg in germany. It has 83 different train stations coming into it and 1200 ships a year and tens of thousands of rocks and it was completely traffic jams. They took technology and change the system on its head and has a 75 improvement in productivity and they will double their capacity in the next 510 years without increase in revenue at all in terms of implementation. You talk to the ceo and he says he is an internet of everything company. They are going to move into bicycles and cars and transportation and different customer experience. You see a country like germany and the Industrial Revolution where the government leaders say i will transform myself. You see in a france, the president of france is in a tough situation. He is thinking about what he can change. If you watch what he is doing and he has an unbelievably good Prime Minister with him and it was a pleasant surprise. He understands have to transform his country. And willing to say how do we do these with companies and how do we partner with the chamber of commerce . 700,000 members and how do they put technology in each of the companies and how to the companies and how to the companys guaranty a million jobs and growth . Back to sales. You are ahead of state level at this point. Tell us what this is. Mrs. Merkel, you have a few things on your plate and i will like to sell you a connected port. And then what happens . Then you say, where do i cut the check . What is that fail like . Lets use israel because we sale like . Lets use israel because we made the sale. You identify the country you want. Second thing they want is jobs. Then they have to include 2 million arabs in israel and the working force which they do not do at the present time. They want to move their cities to the south for economic and defense reasons. You line up with all three political parties. You are bringing political unity to israel, is that what you are saying . No, the key leaders understand how to work on a common goal. If you speak to Prime Minister netanyahu, he will say cisco is my partner. You talk to a Third Political party, head of finance and they say cisco is our partner. You make it nonpolitical. Technology is nonpolitical. You are talk to republicans and that support democrats sometimes. It does not matter which party it is. People grasp what can occur. Once you get the references, it gets exciting. You are able to say this was General Motors does or what was done in israel. And then you have trust. What cisco does, we have a lot of weaknesses. Lets talk about the weaknesses. Everything sounds exciting. The world is changing probably for the better. We know the s p at the large trades at 17. The market has spoken. It is given a referendum on the vision for ciscos sake of what you want to do with the company. Why is there so little multiple happiness for the company . You have asked a loaded question but i will address it that way. [laughter] lets go with it. We outperformed the market dramatically this year. Were up about 10 and as dramatically better than the dow. Secondly, if you watch our earnings, they are up threefold over the last decade. Our revenue is up about 250 . Our ratio has gone from 205 top 10. Not are we a great company, not do we have the number one market share of almost every private area. We out execute our partners. There are a lot of new challenges, concepts like cloud and Software Design network. We have the same challenges a decade ago. Our ability to produce results and get to the growth and earnings in this market. If we grow in the midsingle digits ibm is about 12. That is you of the channels. All of the new change. The challenge is do we get the markets right and what the markets are worried about we are good on transition. The question is, can we get Revenue Growth in this scenario . A Small Company of 20 people can come right at us. On the other hand, every time, we get a 40 market share and combine these products together and take expenses out and moved. Move the solutions. If we do it right, we will have good stock reg avenue a stock revenue. Everybody has seen the ad and the hype about the cloud. Tell us three things that are b. S. About the cloud and three things that are real. I will get in trouble. Quickly go for it. I guarantee my i. T. Team is flooding. Make them slide. Sweat. B. S. On the cloud is it is secure. It is not there yet and it has to be with Certain Applications on it. How easy it is to get some work load balances. The positives it will be the future. We could argue will it be 25 of i. T. Rather than viewing it as a competitor and fighting the concept, if you doubt to enterprise customers, we are the number one player there in terms of private clouds. The key there, is you can see it coming and you use this market transition to become the number one player. We entered the market in cloud and combine technology with storage with the network and everybody said cisco is not a good server. Fastforward five years later we , are the number one in the u. S. 41 market share. In our industry, do you get the market transitions right . I compete against market transitions. Then come are you able to economically bring those to the bottom line . Some have huge pressures on your earnings. Some of them offer tremendous upside if you have the courage to go after it and if you can execute. We do acquisitions uniquely. We do that in cloud. We have done 174 acquisitions out of the last 18 months. All but two of them had been in the cloud software. People have got a lot going on and may not remember much from this conversation but to give one thing they need to know about the cloud. Maybe take off your cisco sales hat for a minute and as a Technology Advisor to people in the room, one thing about the cloud. I think it allows for disruption of business with speed. Many people have private clouds and other use public clouds and we will combine with our partners for a cisco cloud image. Understanding were cloud comes together with mobility and social and security is going to be a large part of where this industry goes. As a Business Leader, you should not care about cloud. You need to know how Technology Enables your goals and how it can enable your goals for connectivity and get it back like we did in the 1990s over the next decade. You want to know how it enables a new set of competitors to come at you. Your competitors and mind will not be the same as they are today. They will be dramatically different in 510 years and regardless of industry. It is not an end goal in its self. Having people on your team who understand the implications. Lets move from clouds to bubbles. We had a piece in the wall street journal that said these Silicon Valley is in a bubble territory. His line was there are more companies losing more money than ever before. Is Silicon Valley in a bubble . Which is segments . You are talking from someone who went from two of five to do hundred 52 205 to 10. What you have to watch and john, a wonderful man on my board, he would be the first to say and this is not about overconfidence. 70 that present 75 80 of the major transitions in the Technology World today expertise is within 25 miles of Silicon Valley. It is hard to describe how unique it is. People were willing to take the risk, unlimited venture capital. Companies are getting funded way too early and the ceos know it. They say if i can raise 200 million now a gift 10 , i will have it for a long time. There is a real worry. Dr. Wang trained me well and the smartest man i know. He said if you think you will go to countries like china and sell one coke, thats not the case. I believe you make money as you go. Cisco has been very profitable since day 1, 1 of the most laughable around. Most irascible around most profitable around. So, i personally think a mistake not focusing more on profits. Your numbers are right and you can argue the company is going public today has no earnings. In 2001, we remember 83 . If you get caught in an economic downturn or in a social media segment of that, you will see some type of breakage to occur. However, if these trends continue, growth covers up the mistakes, the companies will figure out how to make profits out of them. If there is not a major industry disruption were economic downturn, you will probably have a gradual landing for part of those companies. Will the majority of my competitors be in existence 10 years from now . No. The majority of the social Networking Companies be in existence 10 years from now . Probably not. If there is not a major disruption, if there is a major disruption do you see race rates having any impact on Silicon Valley. Not that they will ever raise them. Do you see that . We absolutely do. If you watch what most of my customers view and concerned about, it is the emerging markets. A data point, the emerging markets are in the midteens. 18 months ago, mexico went for 15 growth to flat and one quarter, year over year and the next year 12 . It was a good forerunner. If rates are raised dramatically , you would choke growth in emerging markets. Right now theres only one , engine going well and that is the u. S. 3 growth, not bad. If rates get raised, it could stop the growth in a lot of the world. Our central breaks have to be concerned. Yes, it really could. China, speaking of emergent. Emerging. Not so emerging anymore. Describe how you feel about the complicated relationship between the National Government of china and the united states, the personages of cisco, a representative of the tech industry. Where does that stand and how do you feel and where is it going . Both of my parents were doctors and they taught me to deal with the world the way this the way it is and not the way you wish it were. The complexities is the most complex it has ever been and mexicans out of the state department and a great secretary of state there. We are not effectively communicating between our countries. When you do not communicate well whether it is us and russia were us and china, then you have a lot of fallout occur in the process. My view is china ought to be a great economic partner with us and we ought to the able to articulate the winwin to get there. That is what the chinese would like. What is wrong then . We are not communicating effectively. I dont think they are as well. I am not just talking five Years Experience in china, i have been there 30 years. I follow every leader in china. What are the future leaders. We knew the majority before they got appointed. A market i know well. Cisco and china, it can go either way. I wish i could tell you i control my own destiny there but i do not. The chinese are pretty smart and usually pretty predictable. If our countries were able to work out issues, there has to be rules of the road that we are going to do versus germany or versus china. We have to agree upon those. It is an industry issue. China could go either way as the china could go either way. It is a wildcard. I like india. If you are bidding on emerging markets, modi has the imagination of his country and Business Leaders. He has the equivalent of both the house and senate in his terms with his political party. If i were betting, i would bet bigtime on india. China . A little tougher. They need 7 8 growth. You view them as how would you rank them on the scale of free and open trade with cisco right now . They are in the penalty box bigtime. Having said that, we just achieved one of their top social awards given out in beijing for what we did during the earthquake. 85,000 people died. We change health care and education. The chinese know we have brought transformation and innovation. That is what cisco does. Foreign markets often view u. S. Espionage and cisco as related. Whether fairly or not. That incredible picture of nsa personnel having basically stolen cisco gear, put their software on it, and put it in the sales. A rather incredible photo. First of all, none of us know for sure the facts around that. It was a picture, none of us know the facts for sure. The major danger there is, if we do not get trust in our supply chain, if businesses and governments and remember, 30 of my components come out of china. If our governments do not come together, we have a big problem. Secondly, you have no idea what a government does. All espionage is done in different ways. The easiest way to get into a network is a systems administrator. They are the ones who have the keys. They use the same password on a system that they do on facebook. The bad guys get it. The vast majority of espionage issues will be done by employees rogue nation states and , candidly, organized crime. We are going to try to transition to be the number one security company. Today, the people in this room have 5075 Security Companies in their environment. The bad guys will always get around it. You take a problem and say how do you solve it . We have never given our source code to any government. There are no backdoors that we are aware of. We find weaknesses, we close them. We find any government in any customers network, we give them up immediately. It doesnt matter if its china, u. S. , or europe. Germany has been vocal about u. S. Interests invading german space, for a lack of better term. What do you tell merkel . You have a conversation, what do you tell ms. Merkel . Working on it. If you share conversations with any government leader, you do not have them very long. Generically speaking. The first thing you say if you are not part of the transition you will be left behind. The second thing is we can bring it to you better than anybody else. Third, watch our track record. There is no facts about what people say. You have to earn their trust and providence and essay how do you , achieve your goals in this country and how do you partner with a Deutsche Telekom to bring back to life . Let me use an example of the same conversation of france. When i met with him on friday, it would be an understatement to say it was a tough week. He was remarkably effective. We talked and we went through the issues as in i did exactly what i did here. Two of the heads of states visited the day before or the day of and we knew very well in palestine, we had worked to take the economy 2. 5 to 6. 4 in three years. People give cisco the credit with our palestinian partners to do it. And jordan we had worked on the , Education System and had done that 10 years ago. Currently, we are working on health care and how to transform. Whether a business our government later, it someone can bring you huge benefits and has a track record of being trusted this is an issue for merkel to solve with obama. They have to have rules of the road and conduct and resolve. You cannot put your business in between. A few last things. Speaking of heads of state hillary clinton. She came to address your sales meeting. Tell us, what happened . What was it like . Does she have it . Will she get it . It was interesting. I have probably interviewed 20 heads of state and her husband probably 4 times. She did not want to know the questions ahead of time. She gave a good opening comment for about 10 minutes and then we got into it. Several of my friends came up afterwards and said we have a problem. [laughter] she is really good. [laughter] she she would make a great world leader. She really would. You are very good. As someone who appreciate other people at the top of the again what is the one or two things that she has that you think that make her special in your eyes . She has experience, she is able to articulate her view incredibly well, she listens well, she understands if you are going to lead a country, you lead it with the business. And she comes with the experience that is very strong having watched from the side as the first lady and then senator and head of state and secretary of state. The government leaders will be remarkably candid about our leaders. She has progressed. She has a very good face. As a moderate republican, i hope we can get a candidate that really gets her a run for her money. I think we have a long way to go to get somebody in that position that will have that type of firepower. You are willing to accept treasury secretary for either party . No, i am not into politics. I like democrats and republicans. I like the business. I love what im doing. I have been on the road for two weeks running like crazy. We are going to try to change in the world. Speaking of transition, larry ellison, 70 years old. One awesome company. You are 64. Do you have any thoughts . Just turned 65. I think larry did a great job on transition. They will make it run smoothly. Secondly, the next time i talk about transition will be when we announce at cisco. The next time you hear when we make that transition itself. I have a great number of 510 people that could be ceo of almost any company around the world. He spent a lot of your time jogging. Is that where you have your best thoughts . I think each of us find a different way of thinking. I run in the woods. I am not a fast runner but i love do it. I run uphill first. The first half, i organize my thoughts, solve the problems think through the issue. The second half, i just enjoy it. Lets go to q a. Please. Thank you. My name is pamela teegarden. In my company, we look at Employee Engagement statistics. I will take the conversation a little around the bend because you spoke a lot of productivity. Over the last couple of decades, we have known that a lot of the productivity is tied up in Employee Engagement. We have not come out of that yet. As this productivity increases at unprecedented levels, that will increase operational wellbeing. We need personal wellbeing as well. My question is not how will we adapt, but what is the innovative, crazy new idea that will take practices to another level . I think it will be around social media and collaboration coming to life. Being very open, microsoft and cisco, probably the two leaders in collaboration. We do not do well with collaboration, getting the productivity down through the organization. So, i think the future is going to be allaround collaborative capabilities with the video at the heart of it. Ease of use and not a cio behind you a you have to change the process. Those are one of the reasons i am bullish on productivity. You can have a very advanced video capability that can cost 20,000 in your home for 2000. I think the ability to bring collaboration to the forefront is very important, being challenged. The two leaders in the industry needed to find ways that we interoperate with our customers in the middle and that is not good. Also, the ability to really be there when your employees need you is a key element. I know every illness of every employee at cisco that is lifethreatening. We moved heaven and earth to help them during the tough times. And, we saved a lot of lives. That is part of our culture as well. The majority of our employees, we hold our teams during the tough times pretty well. To answer your question, around collaboration and how do we understand this new generation and what did they expect with the smartphone and around, it has to be easy to use. Are your employees too distracted by their phones . No, not at all. [laughter] to answer your question, the most Important Technology device to every College Graduate is there smartphone. If you do not understand the interface or thats what youre going to sell to them or when they are in your store buying stuff and contacting through social media, to say what do you think, i have to go the other way. You have to find the device will enable relativity and find a way to interface every device and do it right. Please. If you can use the microphone. You talk about ciscos plan and your travels and what to see and the telecommunications. And secondly, i am of the financial side. I come with the school of thought that you buy stock when it is undervalued. Since 2004, you have spent 76. 6 billion buying back stock that was not undervalued. What motivates the buyback that the Company Pursues and such large quantity at prices that do not seem to be attractive . A series of questions in reverse order. This past year, we have a commitment to our shareholders to recommit to values. Out of our 50 , a lot of money per year, we are very profitable , we will return that in the form of Share Buyback and dividend. We got back and gave 120 to our shareholders a you all deserve it. We are going to continue to give at a minimum 50 pretax regardless of tax laws. To your point, though by that has been good from the people we bought it and a shareholder. The stock is up a fair amount. . To the first question in terms of around the world, the Enterprise Market is going well. In the u. S. When you look at the last quarter of this year, we will maintain that rate. What i say today should not have an impact on the current quarter. I am not making any updates. That is three years of law school, thank you. [laughter] but if you watch what is occurring, the technology, again, will get a huge change in terms of productivity and interfacing the customers differently and taking on competitors. It grew in the mid teens last quarter in the u. S. When you look at u. S. Gdp, usually good news and bad news is a good indicator of what is about to happen. That feels really good. Europe, germany, and the u. K. Grew in doubledigit. We look at where it is happening and you can follow that. We did see emerging markets continue to be very challenging and more standard deviation. A lot of pressure on price and a lot of pressure around the world , they do not know how to make money. They are competing against an amazon or google model or microsoft model for top player and they are competing with a very high overhead structure and what they did before was provide transport. I have said, about 12 years ago, voice would be free. I wish id used a different word. 90 of revenues will be free and the same thing we do with data and they must transform themselves to a different level of content to their customers. Many of them are struggling. Some are really getting out of the box. Deutsche comcast telecom. Should verizon by time warner or Something Like that . A lack of people are looking at how you value sustainable to your environment. We watch what comcast is doing at getting content and that is one of the ways and have been successful. If you watch what netflix is doing in terms of content. It is where youre going to get your revenue stream and where do you have sustainable differentiation . A quick follow up into the question. In enforcing a need for a a buyback and dividend i think every ceo has to make the right decision for their company. F you are worried about someone secondguessing or get cautious, you cannot lead. The activists are winning and are in control of wall street. I respectfully disagree. You are seeing a focus on the shareholders, which is right. The right thing to do to give 50 return to my shareholders, we should do it. If the right thing to do is to bet on acquisitions, i am going to continue to do it. If i get beat up on acquisitions that does not work in the major criticism of a Company Called flip, i have 20 copies i paid companies i paid well more than that but had been successful i take that pressure. , you want to be your own activists if it is right for your shareholders and customers, you do it. You always have to listen to constructive criticism. You always have to have the courage to do what is right. If you make the decisions in the short term if people put pressure, your company will not have a good outcome. Fascinating to see the box ibm has put themselves in. A huge commitment to shareholders and perhaps arguably not spending the capital, a digression. Other questions . Use the microphone. If you feel comfortable stating your name. Thank you for coming. Appreciated. Back to the security topic. You see what this happened with home depot and target and all of that. What do you say to the leaders those companies and more from a standpoint and beyond governments need to trust each other, what are the things you think the u. S. Can do from a policy perspective that would engender more trust in even our allies at this point . If you watch what is occurring in the environment and i know i would make people comfortable here, there are no say data centers in the world. You have to know what happens could happen to you. Every company in the u. S. Has probably been broken into and it will not announce it for lots of reasons. The majority it has nothing to do with our government or counterparts. This is why we are going to try to become the number one player in security because it will inhibit how fast the internet goes it will inhibit cloud and mobility in a way that will hurt the entire industry. I think what we have to do is bureau listings that the majority of Security Issues are because do not companies do not follow policy and i will not talk about either of the companies you mentioned. Most of the time when we find a security breach, it is because somebody did not follow the policy they should have. They left a backdoor open or the password is like leaving the key. This is just going to get worse. Organized crime, the sophistication of the attacks are unbelievably good good. The financial reward is unbelievably good. The attacks out of asia were way more than what you probably read about. Unbelievably tough sophisticated type of attacks. What i tell a ceo or leader is first, you are exposed. Secondly, heres how you can minimize. Third, pick the right time for a sales pitch that has to do with the network and i will also be relisting will stop that to get the attention on it to Pay Attention to policy and direction. That is what our companys have done together. But it is something our country has to address. This is where i believe the countrys leaders have to come together with rules of conduct on the road. It is a wild west today. There is no rules. Guess what government should this is what government should do. As long as people know that, you do not surprise your citizens or companies in terms of direction. A question, one or two specific things you would recommend along those lines . Really educate your people. Most of the problems come from people not following procedure. Somebody just left the password open or took the code home. There is good reason for doing that. The second is you need an overall Security Strategy and you need to put not somebody good at it, is a kiss of death to say you are my chief security officer, now go fix it for me. It has to start with the ceo and drive it through. It is the thing that will slow our industry and can lead to billions of dollars in damage just like that. If dad guys bad guys misuse the data. John . Take us back to india for a second and your enthusiasm about modi. There have been a lot the ceos who have come back and said this is indias time. They have said that with congress in charge. What is different this time . I bet on india almost 15 years ago. As a vehicle for emerging countries and graduating 600 600,000 engineers a year. It is the top 5 of their populace in these schools and high, good talent. Indias issues in my opinion have been selfinflicted. If you were to talk to ceos three years ago, they will say they are not getting as much because they cannot off their problems. 76 of their economy is internally generated. They do not have the problem with trade like china or other countries. They control their economy. Their parties and divisive, even though their Prime Minister is a good man, there was clearly corruption with his party at the top and they did not execute. What is different is you have a leader who is going to execute and like anything else, you do not want to make the expectations so high he cannot deliver. He will make the tough decisions. He has captured the attention of the people and the businesses. He is streamlining government controls all of the operations so he does not deal with a divided congress or senate. That is why you see people enthusiastic. If they do not mess it up, they will have a great run. Again, i will bet on india in a big way. That is different from almost every other emerging markets. You have the reverse in brazil and china. Would you agree with that john . I am not sure modi has had a chance to prove himself. There are so many moments of enthusiasm in india that gets caught in the bureaucratic traffic jam. It was interesting for you to say this early in his tenure endorsing a belief there will be substantive change. Part of what i do is bet on market transitions and we always wont always be right. Is it a given he will be successful . No. They have all of the weaknesses of democracy. That the youngest world population, a great Education System for the very top. If they execute, they will have a great run. What was your thought process in the purchase of scientificatlanta . I always. That the cable box would be the center of the day gateway of everything in the connected home. I thought thered be no Better Company to make that happen and yet, nothing has evolved on the box in the past 10 years. Whenever you interface and try to be something other than a network, you say, where do they make their money. My view has not changed. Most make their money into video. It will also be the entertainment and that is what some of the companies will talked about, netflix and comcast are going after our some of the European Companies are going after. The scientificatlanta decision for us and brought us into the most relevant space for customers and they had a unique expertise the customers did not have. What is occurring right now, set the set top boxes are commoditizing. That is why we bought into it. The ability to move from set top boxes into the cloud with video and the next transition we have to make. It is hard to do. It is not easy. As you have seen, the margins have dropped a fair amount. There are areas you have to play for the search providers. The number one area is usually video and the number two is usually mobility and the number three is how do they transform themselves to provide a different level of capability to their individual customers and to enterprise. And how quickly they can develop these new services. If you align with their operatives, you will be very strategic and make a good margins. If you do not allow the Top Priorities and all you are doing is providing boxes, you will get killed by the white label players. And so, that is the play we are making. It has been a good one in terms of relevance. Just a few minutes left. Maybe a couple more questions. Who has them . Everybody has to get to work. Yes . I am an investigative reporter. I am curious if youd be kind enough to elaborate more on the organized crime, are they all Eastern Europe, russia, china . No, they are everywhere. If you watch what is occurring organized rhyme is like the movies. Why do you rob a bank . Thats where the money is. Organized crime is beginning to look at if you are going to try to take money from people or companies, how do you do it in the new electronic age . Unfortunately, they are getting remarkably sophisticated. Some of the strong players are out of Eastern Europe and some from latin america and some from this country. It is something every country has to deal with. Unfortunately, their ability to get the sophistication and tax down and so many people think it is software connected to somebodys electronic device. 99. 9 are done different ways. This is one that i think is going to be with us for a while. It is one each consumer has to be educated on and what are the implications if you open up a letter that looks like it was sent from your bank but from somebody else doing phishing . There is opportunity for companies to really be successful and the security segment and take a negative and make a positive for us. Time will tell if we will be a s successful as i believe we can be. One last question. Christian from reuters. You guys have been mentioned as being in the mix of looking at strategical alternatives and i am wondering if you like to comment on that. Joe is a very good leader and friend. Emc is a good partner for us. What we did with emc, is the storage business and we partnered with them and now ibm to lead in the data centers in terms of direction. What we have done different than our counterparts is combined all of our products to Work Together and we really have uniquely gone across each of our product areas and Service Areas in terms of direction. Emc decided not to do that in opening up to some of the challenges. You do not want to comment on activity with a Given Company , but i will make an exception on this one. We usually get the opportunity for almost every move in the industry. Retrieved the people well, etc. If joe and i were going to do something together, we wouldve done a year or two our goal in terms of direction. A very candid answer. Glad we could end on that. Great visiting with you. My image of you climbing up a hill with a smile on your face is something i can take away. Thank you very much. Give a warm round of applause to john chambers. [applause] final word. Thank you very much. Dennis, a terrific job. You are getting clear then more than enough sleep. John, if i may, 20 years on top of the Technology Sector in this country is extraordinary period longevity. When you became ceo of cisco steve jobs was in exile from a pple. Mark zuckerberg was in the sixth grade and alibaba was a fictional character in a fairytale. It has been pretty remarkable time for longevity. Thank you for much indeed for being here. As i said at the beginning, you can see it again please join us for our next breakfast which will be december 8 with the nice denise morrison, the ceo of the Campbell Soup company. It will be a perfect time to coming up up on cspan, the tech crunch disrupt conference featuring braintree ceo ready and walter isaacson. And whether the u. S. Should arm ukraine in the conflict with russia. Later, Chris Christie speaking at that reagan dinner in new hampshire. At the tech crunch disrupt conference last fall, the ceo of braintree, bill ready talked about paypal acquisition of his company and a new mobile payment system. We also heard from Aspen Institute president walter assess walter isaacson. This is one hour in 10 minutes. Number one fan down there. Very excited. I hope you guys all had a great week. They say that the best things in life are free, but we all know the most important thing in life is money. This guys this guy knows quite a bit. Please welcome to the stage william ready. I was checking our old post and it looks like it has been about a year since we have held since you said it will acquire braintree. One year on, hows it going . It is going really well. A big part of it coming together was we had built a bunch of things that were around Global PaymentsGlobal Payments. We were working with nextgeneration companies. One premise for us is even though we were doing 14 billion plus in volume, we could get to a much eager audience and built on it that products that we had a harder time building on our own. Our premise was easy access to a sophisticated payment process. It was really exciting then, and one year later we launched our