Cisco's Chambers plans to overhaul company focus

Cisco (Nasdaq: CSCO) CEO John Chambers thinks that his company has lost its way, and he plans to make some changes to right the ship. Chambers said that while Cisco has a "sound" strategy to pursue the consumer industry, "aspects of our operational execution that are not."

To fix the problems, Chambers believes Cisco needs to "make a number of targeted moves" and "address with surgical precision what we need to fix in our portfolio."

The turnaround plan e-mail follows two quarters of lower than expected results and a number of senior management changes. In late February, Cisco appointed Gary Moore as its new Chief Operating Officer, while consumer products director Jonathan Kaplan and CMO Susan Bostrom both left the company.  

Analysts believe a big part of Cisco's problem is that ambitious growth plan has been a distraction from its core routing business. This distraction has perhaps enabled Cisco routing competitors like Alcatel-Lucent (NYSE: ALU) and Juniper (NYSE: JNPR) to capture more market share. Alcatel-Lucent, for example, reported that IP revenues increased 58.8 percent to $687 million as IP/MPLS service router revenues doubled from Q4 2009.

Brian Modoff, an analyst at Deutsche Bank Securities, told the Wall Street Journal Cisco "may have gotten too big," adding that "growth for growth's sake is not working for them. They need to focus."

For more:
- the Wall Street Journal has this article (sub. req.)

Related articles:
Cisco needs to put focus back on its routing business, say analysts
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Infonetics: Alcatel-Lucent takes No. 2 spot in worldwide edge router market

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