Cisco losing ground to competitors?

Cisco Systems’ chief executive has announced plans for a company shake-up in the face declining investor confidence. In the e-mailed call to action to Cisco’s 73,000 employees, John Chambers said that while company’s strategy was sound, aspects of its operational execution were not. “We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been a hallmark of our ability to execute consistently for our customers and our shareholders. That is unacceptable,” he wrote.

Chambers said Cisco would refocus on its core markets in routers and switching, collaboration, datacentre virtualisation and video. Investors are concerned about Cisco’s perceived over-expansion into new and low-margin businesses such as consumer products. Investors are also concerned that competitors such as HP, Oracle, Juniper Networks and Aruba Networks and China’s equipment maker Huawei Technologies are starting to eat into Cisco’s core switch and router markets.

While the Nasdaq Composite has risen 15% in the past year, Cisco’s share price has fallen 35% as the company missed sales targets and profits declined. Chambers did not detail what form the shake-up will take, but analysts say it is likely that Cisco is preparing to cut back in consumer products after years of expansion.

Sounds like a great time to be negotiating aggressive discounts from Cisco!

Tags: , , ,

Leave a Comment