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Cisco

e-business applications. Of the 2,885 visits that we hosted this past year at our worldwide briefing centers, over 800 included CEOs and their senior management teams. In our fourth quarter, we saw this number expand, and we believe Cisco is emerging as our customers' trusted advisor.

One of the requirements of serving as a trusted e-business advisor is "walking our own talk" at Cisco by using the Internet in all areas of our operations. Our goal is to demonstrate that our network is key to driving efficiency within our own organization. Over the last several years, cost savings from our Internet-based applications have averaged increases of over 50 percent each year, exceeding $1 billion in savings. Two applications in particular, e-sales and e-learning, are currently having a dramatic impact within Cisco. Today, our sales team has better access to sales statistics, real-time bookings, and customer news, as well as a more efficient process for tracking overall sales efforts. Sales & Marketing Management magazine recently rated Cisco as the "best-trained sales force" in the United States across all industries. This was largely due to Cisco's use of e-learning applications. We achieved a 40 to 60 percent cost savings through increased use of e-learning over instructor-led training in our fourth quarter alone. Additional applications are also being deployed in finance, manufacturing, marketing, engineering, and human resources with cost and productivity goals. We credit our online customer services, collaboration, and support applications made possible through our network for much of why we achieved a 4.5 out of a possible 5.0 global customer satisfaction rating for fiscal 2001.

Our internal focus on improved operations is balanced with a willingness to invest in emerging growth market opportunities. While many of our competitors are retrenching, we are taking calculated risks on innovations and catching market transitions. If you consider some of the most prominent among these future new or "tornado" market opportunities—voice over IP (VoIP), content networking, wireless Internet, storage networking, metro optical networking, security, virtual private networks (VPNs)—the total available market could be more than $40 billion by 2004. Two examples of new growth markets are the IP telephony and security markets, both of which have the potential to be billion-dollar businesses for Cisco.

We are committed to IP technology and product leadership. And while we will pursue the majority of our product development with internal efforts, we will also complement these results with acquisitions and partnerships, especially when entering new markets. As the economy recovers, our investment in new markets will help us deliver innovative solutions to our customers and ultimately help to drive our continued long-term success.

We continue to believe that the Internet and education are the two great equalizers in life. The Internet has the potential to change peoples' lives in ways we're just beginning to imagine, and we continue to support programs that promote this cause. For example, the Cisco Networking Academy Program now includes over 8,000 academies in more than 130 countries. Last summer, we launched an initiative to establish academies in [next page]