Cisco Reorganization Will Give It a Competitive Edge: CEO Chambers
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The painful and company-wide restructuring and job cuts at Cisco Systems, brought on by several disappointing financial quarters, will prove to be a competitive advantage for the networking giant going forward, according to CEO John Chambers.
Speaking to analysts and journalists Aug. 10 while announcing the company s fiscal fourth-quarter financial numbers, Chambers noted that rivals are beginning to undergo the same market pressures such as significant drops in public sector spending that have haunted Cisco over the past year.
Cisco is months along a journey that competitors like Juniper Networks and Riverbed Technology -- both of which saw difficult quarters -- are just about to begin, he said.
"Our moves now give us the advantage over our competitors," Chambers said.
Those moves include streamlining its sales, services and engineering units, getting rid of businesses that don't address Cisco's key markets -- the company essentially cut its consumer business and rid itself of its profitable Flip video camera unit -- and reducing the workforce by about 9 percent by cutting about 6,500 jobs. Seventeen percent of those workers at the vice president level or higher were cut, and another 5,000 will leave Cisco when the company sells its TV set-top box manufacturing plant in Mexico.
The goal is to cut $1 billion in annual operating expenses, and the result will be a more competitive and more focused Cisco, Chambers said.