Cisco’s John Chambers Admits Lack of Focus, Pledges Improvements

Cisco’s had a bumpy year so far, facing rising competition from HP, Juniper Networks, and several others.  Despite a steady product roll-out and a number of strategic acquisitions and partnerships, Cisco’s CEO John Chambers sent out a memo yesterday admitting that his company has “lost its focus, lacks discipline and needs to overhaul its operations.”

We have disappointed our investors and we have confused our employees,”  Chambers says in an email sent to all Cisco employees.

While Chambers stands by his company strategy, he’s still putting Cisco in place to make a number of “targeted moves” and address what needs to be fixed in their portfolio.  The memo suggests some major operational changes, and even cost cuts, are on the way.

The memo was sent out shortly after two quarters of disappointing results, as well as a handful of top-level changes undergone at Cisco.  The company is facing a great deal of industry pressure, thanks to HP’s involvement in networking systems.  The network-switching business has also begun to heat up, with Juniper Networks diving in, and the FCoE scene getting more competitive by the day.

Cisco’s stock has slid more than 30% in the past year, though Cisco’s already made moves towards improving its market position.  Earlier this spring Cisco revealed its latest network-switch initiative, which speaks to promises the company made nearly three years back.

As Wikibon founder and senior analyst notes, “Chambers has been in  a semi-state of denial the past several quarters and he’s woken up to the fact that he can’t just ‘will’ execution. This is an epic moment for Cisco – much like some of the transitions that Microsoft and Intel had to go through when their near-monopolies began to show cracks in the armor and Gates and Grove/Otellini had to rally the troops. This is game time and HP and Cisco are the two combatants that will duke it out. The question now is how fast can Chambers turn the supertanker that is Cisco?”

Perhaps its this delayed fulfillment that’s bugging Chambers.  “We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been a hallmark of our ability to execute consistently for our customers and our shareholders…” Chambers wrote in the memo. “That is unacceptable. And it is exactly what we will attack.”