Cisco lower Profit, but innovation continues

In the fiscal third quarter, Cisco’s reported net income fell 18 percent to $1.8 billion or 33 cents a share, from $2.2 billion, or 37 cents, in the year-ago quarter.

Stiff competition comes from companies like Juniper Networks and Alcatel-Lucent for corporate customers, including telecommunications companies, hospitals and universities. Meanwhile, Spending by government agencies was particularly weak for Cisco, declining 8 percent in the quarter.

Cisco faces additional pressure because of evolving markets and a failure to adapt. Many networking products are now specialized based on the kind of customer, a development that Cisco was late to embrace.

How to do? What strategy will cisco take?

In an effort to reverse the slide, John T. Chambers, Cisco’s chief executive said that he planned to cut an unspecified number of jobs and potentially eliminate or scale back additional products to lift Cisco’s growth. With about 73,000 employees, the company has already eliminated 550 jobs, offered employee buyouts and killed the Flip video camera as part of his month-old turnaround plan.

In addition, Mr. Chambers would take additional steps to streamline Cisco by revamping its complex management structure, which had executives serving on a patchwork of “councils.” Instead of encouraging cooperation, the councils created additional bureaucracy.

What’s more, Mr. Chambers e has begun a series of changes intended to focus Cisco on its core products(Cisco router and Cisco switches). He has scaled back the company’s consumer division, which included the Flip video camera, but others may be affected. Cisco said that it expected to save $1 billion over the next 12 months from its job cuts and streamlining. 

But the turnaround is expected to take time. It’s a company that has pockets of weakness, but it also has pockets of strength. Let wait and see what happens!

From:

http://www.nytimes.com/2011/05/12/technology/12cisco.html?_r=1&ref=ciscosystemsinc