Time for the news feed. The Worlds Largest retailer has cut its fullyear forecast. Walmart is blending slower traffic as supercenters and higher healthcare cost. They havent had increase in samestore sales in europe have. Economic recovery in europe has come to a standstill. In the secondgrow quarter. Meanwhile, the economies of both , promising toance build on the sinless program if the situation gets worse as Stimulus Program at the situation gets worse. Another night of violence in the was suburb. Demonstrators were protesting the shooting of an unarmed black teenager by police. Crowds through gasoline bombs and other objects that police. Police responded with tear gas and smoke bombs. Just close the books of its fiscal year and the numbers from the Worlds Largest maker of networking equipment increasingly from your story for multinationals, it is a challenging environment out there. The u. S. Continues to grow the revenue was down a doubledigit percentages in russia, china, and brazil. Ceo John Chambers is cutting ciscos workforce by 6000. Part of a strategy to reinvent the company. He is with us this morning. Good morning. Thank you for spending some more time with us on Bloomberg Television. You began yesterdays is a pleasure to be back with you. You began yesterdays Conference Call by saying youre pleased with ciscos performance. I want to know what you are with. The John Chambers i know cannot possibly be pleased with 0 Revenue Growth. Actually, i am very pleased with where we are. A year ago, we shared with the market, the market was changing rapidly, that emerging markets around the world getting soft. Everybody said you need to cisco. Fast forward, the changes we predicted occurred exactly as we said they would. We tell the market, heres what were going to do to get back on course. We had 2 down quarters, now we had a flat quarter. Were projecting growth for next quarter. We had record earning per share in the quarter and record earnings per share noncap on the year of two dollars six cents. I spoke to a large number of shareholders and a large number of the analyst last night. They believe we are managing the company strangely well. Understand, as he made these changes, were not cutting the workforce by 6000. The total headcount will not change in the course of the year. Were moving our company to where the growth is going to be. Areas like cloud, software, security. Our Cloud Business grew 37 this last court he does quarter. Our global commercial enterprise around the world grew 8 and 9 respectfully. In the u. S. It was on fire. He was Enterprise Business group 17 . U. S. Commercial business grew 16 . In germany and the u. K. , you saw similar type of numbers. Is working. Our shareholders get that. Were well on our way to reinventing cisco one more time. Whoohn, there are investors wonder why isnt cisco growing faster . Its not a facetious question because ciscos own Research Shows opal data traffic is growing at 60 and will continue to grow at least that pass for the next five years. There are more mobile devices in the world than there are people. Expanding,e businesses are migrating to the cloud. The fundamentals for ciscos strongercouldnt be and you see that reflected in the growth of other companies qualcomm. , facebook, theyre all benefiting from those things. Why isnt cisco benefiting more . First, it has to do with which markets your in. In the security market, i dont think anyone would disagree we are doing a very good job. In the router market, our market share has been remarkably level. In the high 50s, if you will, on the high end for the edges as well. Were going through transition. You will see a start to pick up market share. It has to do with which market your in. In terms of the enterprise numbers you talked about, selling the business. We dont sell to consumers. Very few people are keeping up with this. The majority of our competitors from three to five years ago are not tough competitors today. What you might have worried , we are beating almost all of those players very effectively today. I think in our market we are executing well. That is what our customers and i think our shareholders will say as well. What you stated the question, is cisco two big . Do they need to spin off underperforming assets, lower margin performing businesses, the lift between the growth and how you play . Value play . People that say that dont understand how we are structured. Moved and tied together our architectures. We combined products in a way that allow the customer to have lower operating cost and producer outcomes quicker. In short over the last three years removed from selling boxes to selling architectures which lower their cost and increase their ability to produce results quickly to moving to solutions and now selling outcomes. And that is about the transition we are currently going through. We are not reducing our headcount. Our headcount will be pretty flat this year. Were moving to the areas that are the growth areas. Lout, software, security were going to put the money behind that as we go forward. It is a tough decision to make as a leader but it is about investing for growth and managing your business well. You hit on a key point. You dont want people to think of cisco as a box maker anymore. But five years from now, what will we call your company . Will cisco be generating so much of its revenue from software that we will call it a Software Company . No him a five years from now you will cause the number one i. T. Company in the world if we do our job right for businesses, not for the consumer. That is not a market we are in. If you watch the transition, people who are softwareonly or hardware only, the way we will be the new challenges the way be the concepts of sdn, we will embrace Software Better than anyone else. Willmplementation of it achieve the goals in terms of programmability and flexibility throughout the network will stop then we will lead with applications which allow us to do that in the cloud, and the core of the network, and at the edge where others do not. Were probably going to become the number one Software Player and define networks but we will combine it with our hardware and architectures in ways others do not. Our goal, and well within our , i think it is well within our grasp. What kind of role might emanate or partnering lay in that goal m a or partnering play in that goal . You hit on a very important point. If youre going to innovate, you can move your business to where the growth is. Were in very good shape in our routing and switching products. I think the transition we made for that market is very, very good shape for us. Where youre going to go on partnering a storage comes together with the network with servers, to partner with an emc or net out or perhaps with other players ask a lot of sense. Keyisitions always played a role. Many of the headcount we have added over the last five years our headcount has been relatively flat. Ands very between 70000 77,000. We have moved into where the markets will be, where the growth is. He acquisitions the last 18 months like sourcefire that literally have helped us drive our security growth to 29 . The ability on things under our control with cloud to become the number one private cloud player. To light up and server markets where everybody thought it would be a commodity, we are at 32 growth in our Server Technology with ucs. Moved into number one position in u. S. With 41 market share on Blade Services versus the number two at 35 . Our key is, how do we use partnering, internal activation innovation to grow this and innovate quickly. At the same time, be a place where talent wants to be in this industry at cisco. John, i know you would like to see cisco shares trading at more than 11 times this fiscal years estimated earnings. To what degree are your m a opportunities constrained by your pe multiple . Thats a fair question. 50 billion in cash. The majority is outside the u. S. , and personally. This is where our government has it wrong. The tax policies we have our inhibiting our ability to create jobs. I am proud to be an american company, but they are forcing companies to make decisions about growing their business outside the u. S. , which i think is a terrible mistake. In terms of cash availability, we have no problem using cash outside the u. S. In terms of acquisitions. Inside the u. S. , we dont have problems using cash or taking debt to do acquisitions. If youre to say our ideal scenario would be an instant replay of the last 18 months, all five acquisitions we have done in the last 18 months are doing as well or better than expected. We have been very public. One out of three acquisitions will fail. If i knew which one it was, i would not have done it. You have to be willing to take risks and ran to yourself and encourage to make the decisions we just made about realigning 6000 people. Butcutting the headcount, realigning 6000 people. Our expenses will be flat. This is about growth and investing for the future and doing it better than any of our other competitors. Name me one other that is making transitions we are making with the speed we are making. Main me one that is in 18 number where theyre one bastad number three in two. In other words, our market shares are undeniable. The best in the industry. When you combine these and architectures, which is why you dont break them apart, that play is working. Our peers who are individual boxes trying to sell boxes to a cio and we are telling the ceo how i can transform your business and drive up your productivity, that is a hand we are winning. That is what our teams are doing globally. John, always great to have you on Bloomberg Television. Much amazing to see how energy and passion you have after 20 years. Coming up, the side effects of the fighting in gaza. Hurting one of israels most lucrative industries. It is election day for Major League Baseball. Owners will decide on the next commissioner. Youll hear from former commissioner fay vincent and the 11 00 hour. Negotiations near standstill. The conflict is over five weeks old and visitors are avoiding israel in the thousands. The peak of tourist season in a devastating one of israels major industries. Indirect negotiations continue between israel and hamas and alleyways and markets of jerusalems old city, one consequence of the gaza conflict remains beyond dispute. Tourism here has been devastated. How many customers at the moment . Zero. My guide to the city runs a small touring company for those visiting jerusalem from near and far. During better times, his clientele ranges from couples to large groups from china. The latest run of conflict in gaza has infected the entire trade. One of israels largest economic drivers, tourism. We are talking about close to 4 million tourists coming to israel. You have an income of 6 billion a year. Which is very important for country like us. This year, said of the 4 million visitors to israel that operators expected, it is predicted that number will fall to 2. 8 million with farreaching effects. Airlines and hotels are affected from the transportation taxises, restaurants, drivers, travel agents. Almost everybody will be affected somehow. Jerusalems historic center, the bells toll for businesses that belong to both israelis and palestinians. Year, youhis time of would have people everywhere. Especially in the market. While Israeli Citizens demand answers from readers, many require assurances from their bosses. I have to show my employees that theyre working in a good place and i can provide them salaries and jobs. If im working, i dont tell them, go home. Israels government has promised to, say businesses that suffer losses because of the conflict. But for many, any loss of income is nothing compared to the loss of life. There are people suffering a lot more than us. If we could just have a few months of quiet, we can reach a state of atmosphere he can manage. We can manage. Joining me from jerusalem. It strikes me the conflict between hamas and israel is nothing new. These people have gone through this before. How does this compare to other conflicts in terms of tourism . Youre absolutely right. Many people i spoke to said this is something we are faced again and again over the years. A lot of tourism professionals have gone to this many, many times. This time and has been an extended conflict. The biggest concern is the uncertainty. It is not knowing whether this is going to run on for another few weeks or months. Theyre looking at numbers not just for this year, but for 2015. Typically, historically, does it take for tourism to rebound was a conflict like this settles down and resolves . The people who look at the industry here have told me they can be six months. It can be a year. Year less tourists this and expect that to remain a problem throw the rest of 2014. The big problem is planning for 2015. How do you go about knocking on doors around the world, saying come to israel, it is safe . Because you have to wonder if theyre going to offer more promotions which might end up hurting them in the end. Absolutely. The hotels, some of the more high end ones, have not kno cked down prices as well as airlines. Some of the small businesses, like the guy in the story, he was focused on showing people around the city, hes trying to develop new domestic customers and arrange things like scavenger hunts for israeli businesses. That is a whole new direction with him, so it is something he is struggling with, developing a new form of customer. Do these companies have no choice but to defend themselves fin for themselves or is there anything the government is trying to do or can do to help them . Use on the story there, i think theyre expecting to lose about 1. 5 billion across the industry. The government is in discussions with the association i spoke to the story and theyre talking about numbers like 29, 30 million, 40 million dollars. I have spoken to have said, we dont really want our government to subsidize us, to offer this in money. We want these. One solution to this conflict so we can make our own money for ourselves. Fairpoint. How quickly might businesses expect compensation from the government . Going to berobably the next couple of months according to the people ive spoken to. There a menu to figure out which kinds of businesses are deserving of this. The proof in terms of, can prove that suffered losses themselves and get their cpa involved to sign off on paperwork, so it is a bit of a process. Probably six, 7, 8 weeks. In the meantime, a lot of financial pain as well. Thank you so much for joining us from jerusalem. Coming up, it is no longer a bluechip resort. Why the lights going out in Atlantic City. Time for some markets. Lets talk about Berkshire Hathaway. This stock, the a class shares could just kind hast 200,000 for the first time. It doesnt split. One buffet continues to build on his fortune. Warren buffett continues to build on his fortune. Intrinsicof the value. 329has a market value of billion dollars, the fifth most valuable company in america. Beenrt of the success has investment in the railway system, huge part of business has been transporting oil as well. Over 200,000 per share. Most people dont buy the a class shares, they buy the b clusters and theyre getting expensive at about 133. Im looking at coal. Look at this. A stock whose shares are actually up in the retail sector. It actually beat on earnings even the revenue came in light, were down, com sales even though it gave no forecast for the rest of the year. At the end of the day, looking at income at zero percent but that is after quarter after quarter after quarter of decline. At the end of the day, theyre stemming their profit loss. Sales were only down about 1 . I guess less bad. Sort of good. Coming up, Atlantic City craps out. Wayacebook has found a new to track your shopping habits. Advertisers may actually be pleased. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Makers. S market on Bloomberg Television. Im Erik Schatzker. Im alix steel in for a stephanie ruhle. The last time i was in Atlantic City was when i was eight years old. Governor Chris Christie announced he would commission a the gamingxamine and anno town. Only wayon has found to beat the odds. He does not live far from Atlantic City. He explains why it is not his playground of choice. There was a time when Atlantic City was desperate for business and they were over pitching some of the games. Beganantic city casinos calling don johnson. Offering 50,000 in free bets to get him in the door. Good hes were so suspected it was in worse shape than any other gambling city in the country. Vegas has a Critical Mass and a huge convention business. Major Cross Marketing. The Cross Marketing strategy that keeps las vegas strong also steals business from Atlantic City. Vegas casinos anxious to go profits outside the strip are picking small, regional casinos throughout the country. States hungry for tax dollars are embracing these casinos. Call it a winwin. It is going to generate hundreds of millions of dollars in revenue. Lets do gaming right and lets take the first steps this year. For Atlantic City, new, titian new competition means big losses. Casinos are siphoning players in profits from the boardwalk. Atlantic city is losing too much of its business now. Theres too much competition and the surrounding space. It started with delaware. Pennsylvania put a lot of pressure on them. New york has gaming now. It is just a matter of time before it is going to back to go being a beach town goes back to being a be town. A beach town. If we look at Chris Christie and the summit he is proposing, what is the reality he can do something about this . You know, you bring