Cisco to eliminate emerging markets unit


Promises "sweeping changes".

Cisco Systems plans to eliminate its emerging markets business unit in an effort to fix a slow moving sales organization.

The technology bellwether, which recently said it lost its way after posting a string of disappointing results, on Thursday promised that the move would be part of a set of sweeping changes planned for the next four months.

Cisco, which currently operates under four geographic units, will switch to three units -- Americas, Asia and Europe, Middle East and Africa -- to simplify a bureaucratic sales structure that made it difficult to make decisions quickly.

It will still operate in emerging markets but instead of working in a separate division the sales force in emerging countries will be part of the local geographic unit, said spokeswoman Karen Tillman who said this would "remove boundaries for getting things done."

But investors barely reacted to the announcement, sending its shares up 0.1 percent. Some analysts said the timing could be a form of "damage control" ahead of what they expect to be a weak quarterly report May 11.

"It must mean the quarter isn't as robust as they'd want it to be," said Avian Securities analyst Catharine Trebnick who described the reorganisation as a "good first cut."

Tillman declined to comment on the financial impact of the changes saying that the company would provide an update on Cisco's larger expense management program, including Thursday's announcement and other restructuring moves, when it reports results next week.

She did not say if the sales reorganisation would involve job cuts.

Another analyst ITIC analyst Laura DiDio said Cisco needed to make changes in emerging markets, which include some of the world's fastest growing countries.

"They haven't done well in emerging markets and they have to retrench," said Didio.

After an unsuccessful foray into consumer segments, such as video cameras, Cisco said would return under its reorganisation to what it is best known for: selling network technology to businesses and other large organisations.

Cisco announced last month that it would dump its Flip video camera.

Its shares were up 2 cents to $17.49 in early trade.

(Reporting by Jennifer Saba and Sinead Carew; Editing by Gerald E. McCormick and Derek Caney)

Cisco to eliminate emerging markets unit
Top Stories
Toll Group to go Google
Poaches Woolworths project manager.
How News Corp's CIO tackled skills in his race to the cloud
What to do when your team’s talents are no longer needed.
Photos: How Thodey transformed Telstra
From turbulent Trujillo to Australia's leading telco.
Sign up to receive iTnews email bulletins
Latest Comments
Who do you trust most to protect your private data?

   |   View results
Your bank
Your insurance company
A technology company (Google, Facebook et al)
Your telco, ISP or utility
A retailer (Coles, Woolworths et al)
A Federal Government agency (ATO, Centrelink etc)
An Australian law enforcement agency (AFP, ASIO et al)
A State Government agency (Health dept, etc)

Do you support the abolition of the Office of the Information Commissioner?

   |   View results
I support shutting down the OAIC.
I DON'T support shutting the OAIC.