Cisco wants you to know its rotten year is so very over.Because the company completed its $1 billion in cuts, re-organised its leadership teams, and brought its gross margins back to where they were about two years ago (at about 62% across product lines, reports InformationWeek), it has declared its turnaround is complete.
“We’re through the restructuring,” said Cisco’s Robert Lloyd, vice president of worldwide operations in an interview with The Street. “We’re focused on a little bit more intensity in terms of our competitive tone to make sure we’re really a little more on our toes.”
One ex-Cisco executive who recently left the company for a startup finds that idea laughable.
“What turnaround? All they did was cut expenses. They haven’t changed their business model. They are focused on traditional products and marketing and they aren’t innovating,” he told Business Insider.
It is true that new forms of networking are emerging around Cisco, and not because of it. This includes a technology called OpenFlow, which has been called the VMware of networking. Cisco is marginally dabbling with OpenFlow but HP has embraced it. Another is OpenStack, which is an open source method for building data centres. Cisco did join the OpenStack consortium but can hardly be credited as a driving force behind it.
The former employee says his point is proven by Cisco’s dividends. It issued its first one a year ago and increased the dividend by 2 cents to 8 cents per share last quarter. “Growth stocks don’t pay dividends. Don’t they have a good investment opportunity to grow with their cash?”