Back to Basics?By Reuters | Print
Critics are starting to wonder if Cisco may be better off focusing on its networking core and shedding some of its non-core businesses such as the consumer camcorder Flip, the Cius tablet project, or even the lower-end Linksys router line.
Traditional rivals like Juniper Networks Inc (NYSE:JNPR) are challenging Cisco's market position in routing and switching. But they aren't the only ones vying for a greater piece of corporate spending.
Onetime sales partner Hewlett-Packard (NYSE:HPQ) is now a fierce rival, having bought network equipment maker 3Com after Cisco's foray into HP's server territory.
China's Huawei Technologies Co HWT.UL and ZTE Corp (SZ:000063) are also gaining strength, while analysts say Alcatel-Lucent (PA:ALUA) is recovering from post-merger confusion and winning more accounts.
"Cisco needs to figure out where they want to continue to play, and ... whether they need to exit some product lines," said Mizuho Securities analyst Joanna Makris.
Chambers told investors on a February 9 conference call he was forming a working group to boost margins, and has since made some changes.
Last week, the company killed an experiment with Cisco Mail, an e-mail service that tried to compete with Google Inc (NASDAQ:GOOG) and Microsoft Corp (NASDAQ:MSFT) but never took off. Some analysts said the move was an admission that its $215 million acquisition of PostPath was a failure.
Cisco also created the role of Chief Operating Officer to improve the way its different units worked together.