Cisco irritates investors

Stocks of once mighty producer of network equipment in 2011 dropped by 12% so far. It is the worst figure in the Dow Jones index. Bède Cisco came to the period which was characterized by market growth. The Dow index grew almost by 10%, and only three others of its component reddened this year.

Cisco will submit the quarterly statement on Wednesday, and investors want to hear - whether the CEO John Chambers has a plan for setting of the company for the correct rails. For some time Cisco delighted investors. Last year actions dropped more than by 15%. Chambers was supercareful at conferences on an economic environment.

But it seems that reduction of management expenses (especially at the local level) is the only aspect for which Cisco fought very much recently. However many investors consider that now in Cisco confusion and a disorder.

In addition to the grain business of network solutions, switches and routers for large corporate clients, the company owns the big producer of cable set-top boxes (Scientific-Atlanta), several enterprises of Internet video conferences (WebEx, Tandberg) and the divisions creating network equipment for consumers.

Some think that Cisco grew for the sake of the size, but time to lose weight came. To honor of Cisco, she took a number of steps to try to please uneasy investors. Cisco still one of the most profitable technology companies in the list Fortune 500. Cisco contracted the fight for business of Flip videocamera and recently announced building of an organization structure. But benefits in it was a little, the journalist and the analyst Paule R. La Monica considers (Paul R. La Monica).

Alkesh Shah, the analyst of Evercore Partners, the shareholder of Cisco, said: the company should convince investors that it is going to pay less attention to private consumers more - to large corporations.

Some suspect that one of the enterprises which Cisco can "put" is Linksys - the division making routers for the house and small business. Cisco purchased it in 2003. "I think, Cisco takes the first steps for return to growth, - Shah told. – It makes sense to focus on a basis of the customer base from large corporate clients".

Shah claims that share value for the separate enterprises Cisco can be raised up to $24 if the company receives the share. It is 35% higher, than the current prices on the stock of the company. But probably Cisco needs to make more instead of becoming more compact and angrier. The company should reflect better threats from competitors in the primary activity.

Shah told that Juniper Networks stole some market share from Cisco, and today Cisco faces threat from Hewlett-Packard. Last year HP was purchased by 3Com. Speaking about it, Shah emphasized that was HP very aggressive in the price of this transaction.

However some investors consider that Cisco should not refuse the new enterprises completely. Some acquisitions were repaid.