Cisco boss retrenches, slashes growth forecast

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Cisco boss retrenches, slashes growth forecast

Alex Scroxton

John Chambers has ditched Cisco's annual growth forecast of 12 to 17 per cent and pledged to take out $1bn in costs during fiscal 2012 after a torrid third quarter that saw the networking kingpin take a sledgehammer to its troubled consumer business.

Speaking with his customary candour, Chambers insisted Cisco was a "strong company in a healthy market" but conceded there were problematic areas and said he would take action to address these.

Cisco has already begun this process, announcing a streamlining of its business last week, but on Wednesday's analyst conference call Chambers gave his strongest hint yet that Cisco is looking to sell or shut down underperforming units.

As a result, said Chambers, Q4 will continue to show weakness "while we do the hard work behind the scenes to be able to execute these changes".

This is likely to involve further redundancies throughout the business, which will mostly be achieved through an early retirement programme, although Cisco did not put a figure on how many it would look to cut.

Richard Holway of analyst firm TechMarketView said that Cisco had become a victim of misplaced market focus and execution.

"The networking market is doing okay right now and, indeed, is one of the beneficiaries of the move to cloud. Competitors like Juniper Networks are doing fine," he said.

Despite Cisco's troubles, Q3 net sales of $10.9bn (£6.69bn) still beat expectations, growing 4.8 per cent on the year-ago quarter, although net income was down 17.6 per cent to $1.8bn. 


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