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Cisco’s latest earnings show the company isn’t threatened by competition…yet

Cisco CEO John Chambers at Fortune Brainstorm Tech 2014Cisco CEO John Chambers at Fortune Brainstorm Tech 2014
Former Cisco CEO John Chambers Photograph by Stuart Isett — Fortune Brainstorm TECH

Cisco’s long-time CEO John Chambers didn’t mince words about his company’s critics during his last earnings call Wednesday before retiring.

The networking titan reported $12.1 billion in third quarter revenue compared to $11.5 billion in the same period last year. Chambers let it be known that this 5% gain should silence naysayers who doubt Cisco (CSCO) can remain relevant in an era of cloud computing and other disruptive technologies.

“All this garbage about new players coming in, and software coming in, and white label killing our approach was entirely wrong,” Chambers said.

The 65-year-old executive has a point.

The rise of a new type of technology called software-defined networking has caused industry analysts to question whether new challengers could threaten Cisco’s core business of selling networking equipment. A number of startups are selling the technology, essentially software that businesses can plug into cheap servers from Hewlett-Packard, Dell, and Taiwan-based Quanta instead of buying Cisco’s more expensive pre-loaded equipment.

However, the hype surrounding the upstart technology has yet to seize significant market share from Cisco, which generated $3 billion in cash flow in the quarter.

“We are beating our competitors that you all were worried about,” Chambers said triumphantly.

Chambers explained that rivals that sell “low-cost building blocks” lack Cisco’s expertise in providing customer support for its complete package of switches and routers. If one of these lower-cost machines dies, the owner will likely have no idea who to call for help, he explained.

Still, for a man who claims that Cisco is not threatened by the emerging technology, he sure did mention it a lot during the call. Often with indifference.

And there are subtle signs that Cisco’s legacy switching business is feeling some pressure from potential competition. When an analyst asked Chambers why the company’s switching business grew only 6% in the quarter and suggested that Cisco’s numbers only look good because last year’s numbers were so bad, Chambers grew defensive.

“I will never apologize for growth in single digits for switching,” Chambers said defiantly.

Even if new technology may be gaining traction, Chambers believes Cisco has what it takes to withstand the challenge. He explained that it used to take 3,000 people and five years to develop the company’s high-end products. But now, he said the company is trying to be as nimble as a startup. As evidence, Chambers pointed to a new router under development that he said will require only 225 people to build over 12 months.

“We can now rival the best startups there are in the world and out execute them,” Chambers said.

Those are fighting words, and Chambers seems determined to battle with possible rivals. Whether incoming CEO Chuck Robbins will be as feisty as and confident as his predecessor remains to be seen.

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