Wednesday, April 6, 2011


The Chief Executive Officer, John Chambers, for Cisco Systems Inc. emailed employees that Cisco is struggling financially, but a solution is in the works. The email message stated that Cisco has lost its credibility and now changes would be made to restore the company. Chambers warned staff to prepare for a number of unspecified changes in the next few weeks and coming fiscal year, starting in August.
Chambers, one of Silicon Valley's most respected in the corporate realm, confessed in an internal email that the networking giant had been slow to make decisions, fallen down on execution and lacked discipline in an aggressive expansion. The long-serving CEO, who has apologized repeatedly to shareholders for missing Wall Street's targets, confessed his company let investors down and confused its own employees.
Chambers stated that the business had been slow to make decisions, had surprises where they should not, and had lost the accountability that has been a hallmark of their ability to execute consistently for customers and shareholders. He also added that this is unacceptable and it is exactly what they will attack.
Cisco's last two quarterly results have disappointed the market. In November, the company announced sales growth would be lower than analysts expected. In February, it warned of dwindling public spending and weaker margins from tough competition. The shares have lost a third of their value over the past 52 weeks. Including that slide, Cisco has lost slightly more than half its value since the start of 2001, when it was almost worth $40 a share.
Cisco has lost some of the credibility that is foundational to its success, and now must earn it back. Chambers believes Cisco’s and its market are in transition. He contends that the time is right to define this transition for Cisco and its industry.