The News & Observer
October 5, 2005
JOHN MURAWSKI, Staff Writer



The telecom giant opened a corporate training complex this week at Research Triangle Park as the company redoubles its efforts to keep up with Wall Street's demanding growth expectations. The training center will bring in veteran salespeople and engineers, as well as independent resellers of Cisco telecommunications gear for intensive sessions on how to expand Cisco's global reach.


Cisco CEO John Chambers, a tireless promoter of the company's mission, will come to RTP today as part of the center's official opening.

The training facility is intended to help drive Cisco's growth strategy of tapping into new markets through a global network of independent resellers. Expanding sales potential through resellers is crucial for Cisco, which is coming under increasing pressure from Wall Street to sustain growth of up to 15 percent a year. That benchmark gets harder each year for a 21-year-old corporation fending off legions of smaller, leaner competitors here and abroad.

"The question is: As they get bigger, can they find enough tangential markets to grow 15 percent a year?" said Zeus Kerravala, vice president of infrastructure and security research for the Yankee Group. "If they grow less than that, the stock price will go down."

While Cisco has increased its sales and tripled profits for the past four years, the stock has stagnated during that time. The stock traded at $80.06 a share in 2000, before the dot-com industry imploded. Since then, it has averaged about $20 a share for more than a year and closed at $17.67 a share Tuesday. Samuel Wilson, an analyst with JMP Securities who tracks Cisco, said the stock value resonates far beyond the investing community. As the company's value sinks, he said, it will become more difficult to recruit top talent and compete with aggressive start-ups.

The company's core business is routers and switches, in which it dominates world sales. Cisco controls 75 percent of the world's router market and 71 percent of the switch business, according to analyst estimates. But continued growth now depends on expanding into new fields and by buying startups and small ventures in such areas as voice over Internet protocol, home networking, security and other emerging technologies, analysts said.

With the opening of the Education and Development Center, Cisco's operations now fill 10 buildings in RTP, which is its second-largest site in the world. Cisco employs 2,850 in RTP, up by 500 people since the beginning of 2003. Worldwide, the company has hired about 4,000 during that time.

"Opening the education center is a commitment by the company to grow this site," said Ed Paradise, an RTP site executive and vice president of its Mobile Wireless group, one of the divisions growing on the RTP campus.

RTP is Cisco's lead site in several areas, including government services contracting and training. Cisco stopped predicting its future growth after the company's grandiose plans to employ 10,000 here fell through and ended with layoffs for 292 employees four years ago. While those aspirations seem like pie in the sky today, Cisco is growing steadily while Nortel Networks, another global telecom giant, cut its RTP operations from 2,950 to 2,600 in the past year.

Cisco has two other buildings at RTP that are now unoccupied that it could expand into as operations warrant. It has said it does not plan to sell them. Last year, it sold three to Network Appliance.

The new Cisco facility, part conference center and part retreat, reflects Cisco's roots in Silicon Valley. Visitors are greeted with plasma screens that beam company announcements and scroll inspirational epigrams. New employees undergo 12 to 18 months training in the Cisco way. The training center extends that concept of intensity training to veteran employees and resellers.

About 1,400 people will rotate through the training facility in the first seven months. This week got under way with 70 students from around the United States. When fully operational, the 37,000-square-foot center could host up to 200 students at a time, Brown said.

"The idea of this center is to create an immersion environment," said Scott Brown, Cisco's vice president of worldwide sales support programs. "The key is going to be to develop an organization that's built to last."