Cisco to cut jobs due to declining public spending; domestic and international competition cutting into market share
invite response
2011 May 11, 9:48am 1,504 views 3 comments
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“companies are getting smart and forcing Cisco to earn their businesses again.â€
I'm not sure it's so much losing market share to competitors. I was just at Cisco's San Jose campus today for a conference about their UCS and Nexus. However, we don't have a budget right now to buy any equipment. Our Cisco rep says everyone in the valley is saying the same thing right now.
Perhaps competitors are getting a leg up right because of the economy and Cisco products are more expensive, but I'm guessing once the market returns, Cisco's earnings will improve.
terriDeaner
2011 May 12, 2:59pm
I was just at Cisco’s San Jose campus today for a conference about their UCS and Nexus. However, we don’t have a budget right now to buy any equipment. Our Cisco rep says everyone in the valley is saying the same thing right now.
Not exactly good news for Cisco or SV.
Perhaps competitors are getting a leg up right because of the economy and Cisco products are more expensive, but I’m guessing once the market returns, Cisco’s earnings will improve.
Did the Cisco rep say this as well?
Cisco haha; their halo brands they pushed on a consumer level show their failings on a corporate level. The Flip camcorder and Linksys networking products; all substandard vastly overpriced garbage marketed to those too dumb to shop around. They pull the plug the second their profit spilling leechcows start to need actual effort to compete.
An interesting bloomberg article on Cisco, for those following the job market and tech companies SV:
Cisco Forecasts May Miss Estimates on Price Pressure
http://www.bloomberg.com/news/2011-05-11/cisco-quarterly-profit-exceeds-analysts-estimates.html
Cisco Systems Inc. (CSCO), the largest maker of networking gear, forecast profit and sales that may miss analysts’ estimates amid price pressure in the markets for routers and switches, which direct Internet traffic. [...]
Cisco, which has lost about $50 billion in market value in the last year, is revamping management and scaling back some businesses after losing share to rivals such as Hewlett-Packard Co. [Cisco's] Chief Executive Officer John Chambers said on the call that he’ll eliminate jobs while girding for weakness and lower public-sector spending this quarter. He ditched a longstanding prediction for annual sales growth of 12 percent to 17 percent.
On the positive side for Cisco...
Sales rose 4.8 percent to $10.87 billion in the period that ended April 30. Analysts expected sales of $10.86 billion.
Cisco said during the quarter that one of its high-end routers, the CRS-3, is being adopted faster than the device’s earlier versions. Gross margin, the percentage of profit left after subtracting production costs, was 63.9 percent. Analysts surveyed by Bloomberg estimated, on average, 61.9 percent.
“There are clearly areas of Cisco that are doing well,†Tim Savageaux, an analyst at Terrapin Research in San Francisco, said before the results were released.
On the negative side for Cisco...
Chambers said in August 2007 that revenue would rise 12 percent to 17 percent a year amid rising demand for Cisco’s products. He said today that the forecast is “off the table.â€
Cisco’s shares have declined 32 percent in the past year, compared with the 16 percent gain in the Standard & Poor’s 500 Index. It struggled to maintain historic levels of profitability amid an expansion into more than 30 side businesses such as smart grids, home networking and digital music hosting.
The broadened ambitions let rivals such as Hewlett-Packard, Huawei Technologies Co. and Juniper Networks Inc. encroach on key markets. In Ethernet switches, Cisco’s share dropped to 67 percent last year from 69 percent in 2006, according to IDC, a market-research firm in Framingham, Massachusetts. In routers, Cisco’s share dropped to 55 percent last year from 66 percent.
HP and Juniper are HQ'd in SV so some jobs will (presumably) be reabsorbed here. HOWEVER, Huawei is a multinational CHINESE telecom company with its North American HQ in TEXAS
Sure Cisco is just one company. So does this really matter for the broader SV job market? These folks think so:
Investors view Cisco as a bellwether for the technology industry because it dominates the market for routers and switches, which direct Internet traffic. Companies buy its switches for corporate networks, while phone and Web-service providers typically purchase Cisco’s more-expensive routers.