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Another tech CEO that President Obama had dinner with, regarding job creation, could be laying off staff rather than hiring.
A source said that Cisco could lay off staff as early as May 2011 as the company plans to the divest past acquisitions to focus on its core business.
Cisco had dreams of competing with the likes of Apple, Sony, Google and YouTube. It entered markets it knew nothing about and hoped to win.
It purchased the Flip video camera maker Pure Digital in 2009 for $590 million thinking that consumers will buy it and use it to upload their YouTube videos. Cisco thought the process would make Cisco a household name like YouTube. The Flip camera has flopped. It competes with Apple’s iPhone and other video-capable smartphones that allow consumer to do the same thing. Consumer tastes change quickly and the Flip has not kept pace – it is starting to look old and bulkly.
Then it purchased the PostPath an email service company for $215 million. The plan was to roll out a service similar to Google’s Gmail, Microsoft’s Hotmail or Yahoo Mail. The service never took off and it was killed last week.
Then it purchased Linksys a consumer router company, Tribe a social networking site and even invested in Plaxo – all of which have flopped.
Its latest project is Cius, a tablet computer to challenge the iPad (don’t laugh its true) but one that runs on Google Andrioid. I know that it is a flop for sure! (You can LOL now).
The source said, as a result of all the acquisitions there is a fat layer of duplication at the company. Apparently, there are lots of staff that don’t know what they are doing there beside collecting a paycheck. The source said it is about time that heads roll.
In the meantime, while Cisco has been trying to take on Apple, Skype, Microsoft Hotmail, Sony and others, its competitors have been eating its lunch.
Juniper Networks is challenging Cisco’s market position in routing and switching. China’s Huawei and ZTE Corp products are butting heads with Cisco’s. Even Cisco’s onetime partner Hewlett-Packard is now a fierce rival after the purchase of 3Com.
While all this is happening Cisco’s shares keep hitting lower lows. Every quarter when earning are out the shares hit a new low. On May 12, 2010 when earning came out the stock sold off on 50 million shares and the latest quarter (Feb 2, 2011) the stock sold off on 560 million shares – over ten times the volume. Also, with every earning announcement the drops in share price have been sharper and the bounce backs longer. All this signals that investors have given up on Cisco. The only thing Cisco has left is to use the entire $40 billion in cash to do a share buy back and stream line the entire operations. See why Cisco is dead.
Channels: cisco, cius, flip, huawei, ipad, juniper, skype
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Many Companies are going back to their roots it will be interesting to see what we end up with when this mess is over. Cisco like many others are doing what it has to to survive. Many small business across the United States are doing the same thing nobody writes about them.
Comment by fionnd — March 1, 2011 @ 12:49 PM
Cisco is bloated and stuck in dark ages. lots of middle managers with no clue about how to run a business.
Comment by excisco — March 1, 2011 @ 1:37 PM
Never know there are instinct shopper in companies also…
Comment by BartBlogger — March 1, 2011 @ 3:30 PM
Have to agree with excisco… It's a decrepit environment with little to no innovation remaining. It's now become a tech version of GE.
They'll remain in the market and have success, but their chances of being a true success in the consumer space is nill
Comment by anotherexcisco — March 10, 2011 @ 4:49 PM
Having contracted at Cisco multiple times, I saw more and more dumb full-time employees …..lay offs are happening little late.
Comment by Guru — March 31, 2011 @ 2:49 PM
Agreed. So many business units and yet no direction. Good products but in a me too category. Much of business remains with companies that find it a pain to switch, but startups can pick something that gives better value.
The Flip is an OK product and easy to use, but why would I want to carry yet another device when even my point and shoot camera or an iPod Touch (or now iPad 2) can do HD video? Linksys was an early acquisition and its products are generally of better quality than Netgear and Belkin, but did Chambers forget than consumer electronics don't have 70% margin.
Comment by SVinsider — March 31, 2011 @ 4:06 PM
Cisco has no core values anymore, no core teams, or core strategy. The company is fragmented in so many ways and the results are too many old boys in the old boy network, hiring other old boys and running the entire company into the ground. In a way, it resembles some old school company from another time, once innovative and respected, but now a calcified relic.
Comment by swoosie — April 14, 2011 @ 10:18 AM