Chambers Welcomes Competition
Chambers said he welcomes competition-it being a sign that Cisco is in the right markets-and said that changes made in how the engineers work will make it easier for Cisco to more quickly get products into the market. For example, where once it might take five years to get a product from inception to launch, it now will take three, he said. After several disappointing quarters, Chambers in early April sent out a lengthy memo to employees noting that Cisco had lost its way and that changes were afoot designed to correct problems. Soon after, Chambers essentially gutted the company's underperforming consumer business, including shuttering its popular Flip video camera line.Both Chambers and Moore said during the conference call that changes are not over and that Cisco will continue to realign its business units and organization, including dumping underperforming businesses and cutting jobs. "You'll see us make more changes and tradeoffs in the months ahead," Moore said. There were victories in the quarter, Chambers said. The company's new CRS-3 router was being adopted at a faster rate than the original CRS-1, and sales of the switches for small and midsize companies-such as the Nexus 5000-were good. He admitted, though, that business at the high end, with the Nexus 7000, was sluggish. Chambers said he is confident that despite the issues of the past few quarters, Cisco is headed in the right direction, and that the steps the company is taking will eventually make it stronger. He also told analysts that the expected changes aren't going to be a long, drawn-out affair. "Every time we've done it in the past, we've done it crisply, and then we came out of it," he said.
Cisco earlier this month reorganized its sales, services and management groups to increase accountability and streamline decision-making. That included whittling down the number of management councils from nine to three.