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Cisco CEO laments “lost credibility”

by Scott Bicheno on 6 April 2011, 11:35

Tags: Cisco (NASDAQ:CSCO)

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Moment of truth

To many Cisco remains the untouchable giant of the networking industry, but like many of the other tech giants of the past decade or two, it is being threatened by fundamental changes in the market.

At the start of the week CEO John Chambers sent a message to all employees, detailing that he thinks Cisco has taken its eye off the ball, and needs to get back on track. Here are some of the key passages.

 

We are a $40B company that for the last decade has seen a virtual explosion in market opportunity. The Internet has taken on an entirely new form- and our growth strategy has been based on capturing the incredible opportunity afforded by this massive demand for the network. Many say that in the face of this expansion, Cisco needs more discipline. I agree.

As I've said, our strategy is sound. It is aspects of our operational execution that are 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. And it is exactly what we will attack.

That said, today we face a simple truth: we have disappointed our investors and we have confused our employees. Bottom line, we have lost some of the credibility that is foundational to Cisco's success - and we must earn it back.

 

In essence this is a call to arms from Chambers, paving the ground for some internal changes and inferring that Cisco may have become institutionally inefficient and complacent.

Some of the background for this extraordinary admission from Chambers is revealed in a Tech Trader Daily story, which quotes an analyst questioning whether Cisco can maintain its margins and ever get close to its historical growth. It paints the picture of a stagnating tech giant looking desperately for growth in non-core markets.

Cisco has been disappointing investors for a while now, including a weak outlook towards the end of last year, and another one in February of this year.

 



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