I am no Nostradamus, but my unbiased predictions do crystallise occasionally. So it is with what I have been saying on Cisco — not just after I quit the company in July last year but even when I was with the company and within its own blogging portal for staff.
On November 12 last year (https://joslinv.wordpress.com/2010/11/12/will-cisco-become-a-penny-stock-soon/), I wrote within these columns that very soon the stock price of rival Juniper will be more than double that of Cisco.
That turned true today after Cisco turned in weaker than expected results yesterday and, as usual, John Chambers opened his mouth. At the time of writing, Cisco is going for $19.23 (down 13% for the day), while Juniper is at $41.05. This is much more than double the price of Cisco.
Old-Generation Company: What was once a visionary company is now an old-generation company with no clue about who they are acquiring and why and, importantly, why they are unable to innovate and compete with even Chinese vendors such as Huawei.
I have respect for John Chambers for he led the company to glory. Importantly, when I sent him a mail on why I quit Cisco, a day before my last day, it elicited an immediate reply, instructing a direct report to probe the issues I had raised. It was a little too late for me as I had already accepted an offer at BT. Mr Chambers, however, instantly walked a notch up the pedestal in my esteem.
But that is not going to stop me from saying that it is time for him to step down without delay rather than preside over Cisco’s demise. His credibility is clearly at stake for Cisco is the worst performing company on Wall Street during the last one year.
I am no longer with Cisco, but I still own Cisco stock. Cisco is a company that buys back stock. So, its deliberate ploy is to ensure its stock price does not go up. These are not things a company or individuals with business integrity will do. No stock price appreciation, no dividends. So, why will investors want to invest in Cisco?
Not just Juniper, another small competitor, Riverbed, also has a stock price that is more than double that of Cisco. A few years ago, a senior Cisco colleague left the company to join Riverbed when the latter’s stock price was much less than that of Cisco. Another young colleague joined Juniper when its share price was about $25 less than what it is now.
Talent Flight: Cisco has sunk deep — losing key talent, getting stuck with dispensable people, falling short in innovation, losing market share to all and sundry in the networking business and adopting questionable tactics to buy back stock.
What more shame is Chambers waiting for to throw in the towel? I cannot even say, “go in dignity, Mr Chambers”, because there is none left already.
— G Joslin Vethakumar