Cisco Systems designs and sells communications and networking technology as well as services. Its corporate headquarters are in San Jose, Ca.
Sandy Lerner and Len Bosack, a married couple who worked as computer operations staff for Stanford University, began Cisco Systems in 1984. Cisco’s name is derived from the city of San Francisco.
They built their new company around the router, which had been created by Bill Yeager, an employee at the Stanford Department of Medicine. The device was built around a microcomputer, which made it possible for the medical-department system to “talk” to the business-school system and the computer-science system in one language: Internet Protocol (IP).
By 1986 the company was pulling in $10 million a year. When venture capitalist Don Valentine came aboard with $2.5 million, he was given one-third of the company (with a market capitalization of $224 million) and was listed on the Nasdaq stock exchange. After six months of butting heads with Valentine and then president John Morgridge, Bosack and Lerner quit Cisco and sold their shares back to the company for $170 million.
While Cisco was not the first company to develop and sell a router, it was one of the first to sell commercially successful routers supporting multiple network protocols. As the Internet Protocol (IP) became widely adopted, the importance of multi-protocol routing declined. Today, Cisco’s largest routers are primarily used to deliver IP packets.
Cisco acquired a variety of companies to bring products and talent into the company. In 1995-1996 the company completed eleven acquisitions. Several acquisitions, such as Stratacom, were the biggest deals in the industry when they occurred. During the Internet boom in 1999, the company acquired Cerent Corporation for approximately $7 billion. It was the most expensive acquisition made by Cisco to date, and only the acquisition of Scientific Atlanta has been larger. Several acquired companies have grown into $1Bn+ business units for Cisco, including LAN switching and Enterprise (VOIP). Cisco acquired Linksys in 2003.
In late March 2000, at the height of the dot-com boom, Cisco was the most valuable company in the world, with a market capitalization of more than $500 billion. It is still one of the most valuable companies.
The company was a 2002-2003 recipient of the Ron Brown Award, a U.S. presidential honor to recognize companies “for the exemplary quality of their relationships with employees and communities”.
A class action lawsuit filed on 2001 accused Cisco of making misleading statements that “were relied on by purchasers of Cisco stock” and of insider trading. While Cisco denied all allegations in the suit, Cisco’s liability insurers, its directors, and officers paid the plaintiffs $91.75 million to settle the suit in 2006.
In 2010, Cisco bought Starent Networks, a mobile technology company and Moto Development Group; a product design consulting firm that helped develop Cisco’s Flip video camera.
The company has built its Globalization Centre East in Bangalore for $1 billion and 20% of Cisco’s leaders will be based there.
This year Cisco completed the acquisition of privately held network configuration and change management solutions company Pari Networks, and announced the company were discontinuing all Flip camera production. Cisco and its history was featured in the documentary film Something Ventured which premiered in 2011.
Due to lower than expected profit, Cisco has announced it will cut annual expenses by $1 billion. It will cut 4,000 to 5,000 of the company’s 73,400 employees, mainly by an early retirement program.
Today Cisco Systems, Inc. is a multinational corporation with over 66,000 employees, with revenue of $42.86 billion during the past 12 months.
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