UPDATE 3-Cisco targets 12-17 pct growth on firmer economy, M&A

* Cites economic recovery

* Push into new markets via acquisitions, new technologies (Adds more comments)

By Ritsuko Ando

SAN JOSE, Dec 8 (Reuters) - Cisco Systems Inc (CSCO.O) Chief Executive John Chambers reiterated the company's long-term target of 12 percent to 17 percent annual revenue growth, citing an economic recovery and expansion into new markets.

The top network equipment maker has fallen short of such growth rates in the past year as customers cut back on technology spending, but Chambers, at a financial analyst conference, said conditions had improved in recent quarters.

"Most of our customers on a global basis had cut just about everything they could cut over the last 18 months. And the conversation is turning to, 'If I continue to cut I'm into muscle. I'll do that if I have to,'" Chambers said on Tuesday.

"But they're really saying, 'Where can I grow?'" he added.

He later said that the mid-point of the 12 percent to 17 percent range would be a mere "B" grade result, and that an "A" grade achievement would be growth at the high end of that range or above.

"I would like to operate at the higher end of that range," he told reporters. "We realize, however, you always want to be very realistic."

Chambers said Cisco would continue to aggressively push into new markets through acquisitions and investment in advanced technologies, helping it achieve strong growth.

Having already established market leadership in its main servers and routers business, Cisco is expanding into data center servers as well as consumer markets to support long-term growth.

Analysts said Cisco would likely achieve the 12 percent to 17 percent target within the next year or two, saying Cisco's leadership and sales teams were good at execution.

"As long as the global economy continues its recovery, we continue to believe Cisco can achieve this objective over the next few years," said Ticonderoga Securities analyst Brian White.

Cisco's revenue in its fiscal first quarter, which ended Oct. 24, fell 13 percent from a year earlier. It has forecast second quarter revenue to increase 1 percent to 4 percent from a year earlier.

M&A PUSH

The company's strategy is to turn emerging technologies into profitable entities, and to then integrate them with the rest of the business to contribute to overall growth.

Cisco's acquisition of the maker of Flip video camcorders, as well as its development of high-definition videoconferencing systems called TelePresence, are examples of that strategy. Both products help drive Internet traffic, which in turn creates demand for routers and switches.

Chambers said the company plans to make sure its various technologies, including the Flip camera as well as its videoconferencing, e-mail and messaging services, eventually work together.

Acquisitions have helped Cisco, which turns 25 years old this week, grow into the world's biggest network equipment maker with annual revenue in excess of $35 billion. When John Chambers became chief executive in 1995, it had around $1 billion in revenue.

Chambers said Cisco's leadership had mastered dealmaking, enabling it to pick up its pace of acquisitions since Oct. 1, when it announced plans to buy Norwegian videoconferencing company Tandberg ASA TAA.OL.

"In 45 days we did four acquisitions around the world, three of them outside the U.S.," he said.

"We didn't even break a sweat," he said, but with a chuckle quickly added that it may have, just a bit. The Tandberg deal initially faced strong opposition from the Norwegian company's shareholders, forcing Cisco to raise its offer price.

Cisco eventually won control over more than 90 percent of Tandberg and is planning to close the acquisition pending regulatory approval.

The company ended last quarter with $35.4 billion of cash and investments, and although it has since announced multiple deals it also has replenished its war chest with a $5 billion debt sale.

With most of its cash held overseas, Chambers said it made sense that its acquisition strategy was becoming more global, although he also encouraged Washington to adopt policies to encourage U.S. companies to repatriate their profits. Three of Cisco's four recent acquisitions were for overseas firms.

"We will invest where we make our profits," he said. "You will see our partners and acquisitions strategy go global." (Reporting by Ritsuko Ando; Editing by Tim Dobbyn, Phil Berlowitz and Carol Bishopric)