Tuesday, May 3, 2011

Big Box Sustainability Starts at the Top

Repost from the NY Times:

Redirecting Cisco by Cutting Sprawl

Cisco’s chief executive, John Chambers, acknowledged last week that the company he has run for 16 years had lost its way. Now he’s putting some money where his mouth is and shutting parts of the overextended networking company’s shrinking consumer business. That’s sensible as far it goes. More will be needed to simplify Cisco’s sprawl and improve shareholder returns.

The company’s expansion into consumer markets has always looked like mission creep. The purchase of the maker of Flip video cameras for $590 million in 2009 was emblematic of the problem. Cisco justified the deal at the time as “key to Cisco’s strategy to expand our momentum in the media-enabled home and to capture the consumer market transition to visual networking.”

But it was never clear why a company that had been enormously successful in delivering advanced, expensive networking gear for the corporate market should spend heavily to move into producing cheap gadgets for consumers. Now, it’s shutting Flip, and expects to take a $300 million charge. That’s bitter, but medicine often is. There's more..

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