Cisco divides to conquer

NEWS Cisco revealed further plans to restructure its business in the wake of its 17-month long share slide. The company is being divided into two groups, with marketing and engineering hived off into separate divisions. This replaces the group's old structure, with two divisions combining marketing and engineering functions for different lines of business, one for the large carrier market and the other for SMEs. The engineering division will now be split into 11 groups, specialising in different parts of the business: access, aggregation, Cisco IOS Technologies Division (ITD), internet switching and services, ethernet access, network management services, core routing, optical, storage, voice, and wireless. The move is a response to the increasingly converged nature of the telecommunications and networking businesses. Many Cisco products now address both markets, such as their combined IP-PBX and routers, and the company hopes the new organisational structure will help it to meet this requirement. Cisco president and chief executive John Chambers said in a statement: "At the heart of this change are our customer requirements and our clear market transition opportunity. Our [old] 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." The announcement is part of a six-point plan announced in February to refocus the business, reduce headcount and cut costs. The markets have responded positively to yesterday's news, with Cisco's shares climbing over six per cent in early Friday trading.