Tags: Cisco | Chief | Chambers | Admits | Flaws | Memo | Lost

Cisco CEO Chambers: 'We Have Lost Accountability'

Tuesday, 05 Apr 2011 01:48 PM

Cisco Systems Inc. Chief John Chambers sent a memo to employees defending the networking company's strategy while acknowledging it has flaws in "operational execution" and a loss of accountability.

The 1,490-word e-mail, sent to Cisco employees Monday, calls for the company to focus on five areas: routing, switching and services; collaboration; data center virtualization; architectures; and video.

Chambers, Cisco's chairman and chief executive, also asked employees to prepare for a number of unspecified changes in the next few weeks and fiscal year.

"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. "That is unacceptable. And it is exactly what we will attack."

Cisco's last two quarterly results have disappointed the market. In November, the company announced sales growth would be lower than analysts had expected. In February, Cisco 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.

Chambers said Cisco had disappointed its investors and confused its employees. "Bottom line, we have lost some of the credibility that is foundational to Cisco's success — and we must earn it back," he wrote. "Our market is in transition, and our company is in transition. And the time is right to define this transition for ourselves and our industry."

Cisco has expanded over the past several years away from its traditional strengths in routers and switches, and into areas such as set-top boxes and consumer devices.

Sales in both areas fell in the last quarter. Chambers addressed this in his memo.

"Our growth strategy has been based on capturing the incredible opportunity afforded by this massive demand for the network. Many say that in the face of this expansion, Cisco needs more discipline. I agree."

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Cisco Systems Inc. Chief John Chambers sent a memo to employees defending the networking company's strategy while acknowledging it has flaws in operational execution and a loss of accountability. The 1,490-word e-mail, sent to Cisco employees Monday, calls for the...
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Tuesday, 05 Apr 2011 01:48 PM
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