Cisco CEO Robbins On The Tax Reform Cash Bonanza, The Google Partnership And Why IoT Is All About The Network

Robbins Talks Taxes, Google, IoT

Cisco Systems CEO Chuck Robbins spoke with CNBC Friday after detailing an encouraging first quarter performance earlier in the week. The CEO covered ground ranging from the role Cisco is playing in the IoT market to his hopes for tax reform and what that could mean for the San Jose, Calif., company's capital strategy.

Robbins said Cisco would likely increase its already brisk pace of M&A, make investments in innovation and pay dividends and do stock buy-backs if it can repatriate cash held overseas as a result of tax reform currently making its way through Congress.

Robbins also discussed his outlook for Cisco's new hybrid cloud partnership with Google, as well the prospects for growth as the networking giant seizes the opportunity presented by the cloud and IoT.

What follows are excerpts of Robbins' discussion with CNBC.

Repatriation Roundup

"We'd certainly be in the top five" companies benefitting from repatriation under the tax reform proposal now in the U.S. Senate. "We're optimistic about what's happening now with tax reform," Robbins said. "We believe the House and the Senate will come together, settle their differences and get something through. We're hopeful, and clearly we'd love to have access to that cash and it would give us the ability to do lots of different things from a capital investment perspective."

Getting Territorial

Robbins said the "different things" Cisco would do with repatriated cash could take a few forms. "We see increased M&A. We see investments in innovation and innovation centers. We see the ability to do, obviously, dividends and buy-backs, as well. We'll leverage the cash across all aspects of our capital strategy. The territorial tax system just gives us more flexibility to move cash around as we need it depending on where we need to put it to use. The place we'd like to put it to use is the United States," Robbins said.

The Google Vision

Robbins explained that the recent hybrid cloud partnership Cisco formalized with Google is a response to the needs of customers. "What we see happening today is our customers began this journey to the cloud, and the reality is it is not a destination, it's a method of consuming technology services, and now they find themselves with multiple cloud services with multiple SaaS providers like Salesforce and others," he said. "They still have their private data centers, and now the explosion at the edge with IoT and all the data that's being created, the single, pervasive common denominator across all of that is the network. As a customer tries to implement a consistent policy, consistent security across that complex environment, the network is where that hybrid cloud enablement has to occur. That's what Google realized and that's what drove us to this partnership."

Growth Engine

Cisco said it expects revenue to increase between 1 percent and 3 percent in the second quarter. The optimistic outlook was perhaps not upbeat enough for CNBC commentators who asked Robbins what was stopping revenue from climbing "mid-single digits." Robbins said it is simply too early to tell. "We're one quarter into this campus refresh, we made an acquisition this summer with Viptela, which is a software-defined WAN provider, and we think between the new innovation we've built internally, the acquisition we made with Viptela and some of the clarity we're providing around multi-cloud policy management that we can begin to help our customers evolve to the next generation enterprise architecture. We're just a quarter or two in, so we'll see."

So Many Things

One of the most significant areas of opportunity for Cisco is in the Internet of Things, Robbins said. "IDC has predicted that in 2020, on a global basis we'll be adding 1 billion new devices to the network every month or so," Robbins said. "One million per hour. Our Jasper acquisition we made two years ago is the largest commercially available machine-to-machine connectivity platform in the world. We have about 56 million connected things to it today. It's cars, it's elevators, it's vending machines. Everything is being connected. We're at the very beginning of it right now. What we're seeing happen is technology is not restricted to IT anymore. Technology is infiltrating every industry. It's no longer enabling the strategy of a company; it's fundamentally redefining the strategy of a company. It's at the heart of everything. This is why every job is going to change. It's going to be everywhere."