Cisco reorganizes, sharpens business focus

Summary:The company will reorganize its business units to focus on 11 target technologies, and Senior Vice President Kevin Kennedy will leave as part of a management restructuring.

Cisco Systems said Thursday that the company will reorganize its business units to focus on 11 target technologies, and that Senior Vice President Kevin Kennedy will leave the company as part of a management restructuring.

The networking equipment giant will do away with its current three-part business line--focused on big business customers, service providers and the commercial market--in favor of a centralized engineering and marketing department.

Cisco's new plan is intended to encourage teamwork and eliminate areas of overlap, which will reduce costs, executives said.

"Our line of business structure has served us very well in the past, when customer segments and product requirements were very distinct. Today, the differences have blurred between these customer segments, and Cisco is in a unique position to provide the industry's broadest family of products united under a consistent architecture," Cisco Chief Executive John Chambers said in a statement.

Major suppliers to the communications sector, such as Cisco, Nortel Networks and Lucent Technologies, have been pounded in the past year by the slowing economy and reduced sales to these carrier customers. Many have restructured to boost sales. Lucent on Thursday revealed the second phase of its restructuring plan, which included further layoffs.

Cisco will now focus on 11 technology markets, including: access, aggregation, Internet switching, Ethernet access, network management, core routing, optical, storage, voice, wireless and Cisco's IOS Technologies Division.

Cisco also made several executive changes related to the restructuring.

An eight-year veteran at Cisco, Kennedy will leave "to pursue external opportunities," according to the company.

Kennedy, known as a keen strategist, oversaw the company's plans to enter the service provider market and was among Cisco's most vocal advocates for its Internet-based networking products. His departure makes Kennedy the latest senior executive to leave the Cisco fold.

About a year ago, Executive Vice President Don Listwin left the company to join wireless technology company Openwave Systems. Similarly, Gary Daichendt, also an executive vice president, left in December.

In other executive moves, Mario Mazzola, formerly senior vice president for the company's new business ventures group, will serve as chief development officer, where he will oversee the 11 technology groups and will report directly to Chambers.

Charlie Giancarlo, formerly senior vice president of the commercial business unit, will manage four of the new technology groups. Michelangelo Volpi, formerly chief strategy officer, will run the Internet Switching and Services group. James Richardson, formerly senior vice president for the enterprise unit, will now serve as chief marketing officer.

Stock in Cisco closed Thursday more than 3 percent higher at $17.03. Shares have traded as high as $69.63 and as low as $13.19 in the past year.

Despite the communications-sector malaise, executives hinted that the current quarter is going well so far. "Although we can't predict the future, our orders for the first weeks of this quarter are in line with the expectations we discussed in our fourth-quarter earnings call," Chambers said in a statement.

Cisco executives said the reorganization is not a move away from the faltering market for selling hardware to big telecommunications service providers.

"This is not a deemphasizing of any market. We're very much focused on the service provider market," Chambers said. "Most of the products will probably end up in the service provider market. The products will go in multiple markets. The market will come back to service providers."

Separately, Cisco completed its acquisition Thursday of AuroraNetics, a San Jose, Calif.-based maker of equipment for metropolitan fiber-optic networks. The deal was first announced in July.

Topics: Cisco

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