Cisco CEO says company is 'flawed'

THE CEO of Cisco Systems, John Chambers has called the company "flawed", but he has plans to address the number of problems he listed for employees in an internal memo.

He emailed the roughly 1,500 word message to staff on Monday, giving an honest assessment of Cisco's performance. He said that the company has been "slow to make decisions", that it has been surprised by things it shouldn't have, and that it has "lost the accountability that has been a hallmark of our ability to execute consistently for our customers and our shareholders".

Chambers was blunt about the company, which he said had "lost some of [its] credibility". He added that Cisco "needs more discipline" and called the network equipment maker's flaws "unacceptable".

He vowed to attack these problems and return the company to a stronger position. He said both the market and Cisco are in transition and that Cisco must define this transition for itself and the industry at large, according to Reuters.

The criticism from the top follows poor financial performance for Cisco over the past year. Share values have dropped by roughly a third over the last 12 months and by half since 2001, showing that Cisco's decline has been happening for some time. Recent earnings reports have not helped the matter, with Cisco revising its forecasts downwards for the past two quarters.

As pressure mounts from shareholders for Chambers to fix the problem, it's understandable that he decided to issue the blunt memo, which he clearly hopes will assuage some fears about the future of the company. At the time of market close yesterday evening, Cisco's shares were up $0.16 to $17.22, a 0.94 per cent increase. But this is still far below where the stock price was only a year ago. µ