It’s no secret that Cisco (ticker symbol CSCO) has been struggling and therefore needs to make some changes in their operations and business models. Today’s Wall Street Journal (wsj.com) reports that Cisco is moving to streamline its operating model as it looks to simplify its management structure and refocus its operations. “It’s time to simplify the way we execute our strategy, and today’s announcement is a key step forward,” said Chairman and Chief Executive John Chambers.
The move to streamline Cisco’s structure comes after Mr. Chambers conceded in a memo last month that the company had suffered a lapse in operational execution, and had confused customers and disappointed investors. A few days later, Mr. Chambers warned that the company would have to cut back on several areas, making “tough decisions” on where to shut off spending to preserve profitability. That led Cisco to curtail some of its consumer operations, including shuttering its Flip video-camcorder business, in an admission that its multiyear campaign to build a consumer brand had largely failed. Cisco at the time called that move part of a “deep portfolio analysis.” Analysts view the actions Thursday as Cisco’s second step in its restructuring program—something that eventually could help it gain back some of the ground it has lost.
Cisco has reported disappointing results for its two latest quarters, as well as several recent executive changes. The company in February posted an 18% drop in quarterly profit and a 6% rise in sales, amid growing pressures in the company’s core network-switching business from rivals Hewlett-Packard Co. and Juniper Networks. The stock currently trades at $17.48, well under its 200 day moving average, indicative of poor investor sentiment and support.