Will Cisco revive its lost glory?
By Binu Paul, SiliconIndia   |   Thursday, 14 April 2011, 14:18 IST   |    6 Comments
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Will Cisco revive its lost glory?
Bangalore: With more than 70,714 employees and annual revenue of $ 40.0 billion, all is not well at Cisco as it gets ready to lay off 550 employees and close down its popular Flip Camcorder as part of a restructuring of its consumer business. Earlier in February this year, Cisco has reported quarterly profit that fell from year-ago results. The company said its net income for the fiscal second quarter ended January 31 fell to $1.5 billion, down 18 percent from a year earlier. Company's shares have declined 11.5 percent so far this year. According to data provider CMA, Cisco's debt rose 1.8 basis points to 64.3 basis points, the highest since Aug 31, 2010. The company is facing serious threat from lower-priced competitors like Juniper Networks and Hewlett- Packard. Cisco detached from acquisitions for the first seven years, but ever since it took over Crescendo Communications in 1993, acquisitions constituted 50 percent of the company. However, the company's slower revenue growth has been attributed to its wrong acquisitions unrelated industries. Latest in its acquisition spree, Cisco has bought newScale, Inlet Technologies, Pari Networks this year. Cisco's Chief Executive Officer John Chambers had reiterated last month that the company needs major changes to rectify management mistakes and it would take some 'bold steps' and 'tough decisions' to address its revenue loss. The network giant has been struggled with severe execution problems and is planning a strategic shift. As its new strategy, Cisco plans to reach maximum consumers indirectly through its business customers, rather than making products that shoppers buy straight from Cisco. It was clear from Chambers' prepared statement which read "We are making key, targeted moves as we align operations in support of our network-centric platform strategy. As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings." The company has also revealed that it's laying off 550 employees and is shutting down its Flip video-camera business which it acquired for $590 million as part of restructuring its consumer business. The California-based networking major will re-focus on its core corporate priorities of routing, switching, collaboration and enterprise video. As per its new plans, Cisco's umi home TelePresence unit that was announced in October of 2010 will now be integrated into Cisco's enterprise TelePresence portfolio. This was considered to be Cisco's entry point into consumer telepresence systems and it had planned to make the umi available through retail channels including electronics retailer Best Buy. The company is also contemplating on how to better integrate its Eos media platform into other aspects of its enterprise business. For greater profitability, Cisco will refocus on its Home Networking business and plans to develop a closer connection between Home Networking and its core networking business. Its investors hope that the consumer restructuring planning would bring the lost glory to Cisco and would generate greater revenue in the near future.

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