Referring to this article below, CSCO is going to be attacked from below by Huawey and Dell and by other low-cost vendors.
CSCO to protect itself is joining the big guys -first IBM- and now Nortel and potentially also Lucent. CSCO is dumpig his youth new world image and joining the old world they use to thumble they nose at. I think they will keep the PABX too! :-)
As you see the FCC going out to support the RBOCs and with it NT and LU via re-regulation of telecoms now that it helped kill the Covad's and Rhythms Networs of this world.
FCC Talk Boosts Lucent, Nortel
Jan 07, 2003
The stocks of major telecom equipment companies continued to react positively on Tuesday to the news that the Federal Communications Commission (FCC) <<http://www.fcc.gov>> is considering providing regulatory relief for the RBOC networks, and a prominent telecom analyst says such changes are likely to benefit companies such as Lucent Technologies Inc. and Nortel Networks Corp.
Feds mull broadband market shake-up
By John Borland
Staff Writer, CNET News.com
January 6, 2003, 4:10 PM PT
U.S. regulators plan to unveil a major overhaul in telecommunications policy in the coming weeks that could strengthen the hand of local phone monopolies in a number of key areas, including high-speed Internet access.
Hence CSCO's future is much more protected by joing the big boys club than going against them.
Cisco + Nortel?
Optical Networks Daily - Jan 09, 2003
Continuing the observations stimulated by John Chambers speech yesterday <http://www.opticalkeyhole.com/keyhole/html/eventtext.asp?ID=31557&pd=1/8/2003>, there are three bits of information that seem vaguely convergent; the first was the recent reorganisation of Nortel and the appointment of Masood Tariq as strategy manager in charge of alliances. (see note 1 below). The second was Chambers' comment that he favoured more cooperation with Lucent and Nortel but had no intention of buying them. The third was Chambers' comment that Cisco would continue to make acquisitions but only of companies that had already put themselves financially in order ("downsized" was the actual quotation).
Whether these three items make a complete story is not certain, but taken in pairs do at least suggest on the one hand that the financially highly cautious and conservative Cisco management (understandably cautious given that at least 50% of its shareprice premium probably depends on the view that the company is really much more interested in money than technology) has maybe been quite tempted by the bagel-pricing of its two gutted equipment peers, but is not prepared to take over operations still containing perhaps significant unexposed financial risks. And yet on the other hand the suggestion is that Cisco does scent a major opportunity to exploit the significant residual, and at the moment very cheap, commercial and technical assets remaining in the two companies which might otherwise go to waste due to lack of investment, but could still be brought to fruition using Cisco's surplus cash in a situation where Cisco could negotiate some amazingly good deals.
Clearly Frank Dunn's thoughts are moving in the same direction though with inverse logic, ie Nortel must be trying to work out how to maintain its historic strategic momentum with very little available money.
Whether Cisco would be his favourite partner is not so sure, but in fact the companies are much less directly competitive with each other in real current terms than might be supposed. (See note 2 below). Given the curiously serendipitous timing of the two announcements it is remotely possible that they have already come to a generalised agreement to look for such opportunities, and the appointment of Masood Tariq has been specifically dedicated to such a project - ie to hunt out cooperative opportunities with Cisco and to manage them. Even if that were not specifically the case, the opportunity is certainly there.
NB 1: Two decades ago such an appointment would have been regarded as a consolation prize and facesaver for a well liked line manager, whose job had outgrown him. Though that possibility remains, nowadays, with so much of the operational side of the business outsourced or mechanised and in any case far more deterministic, the role of strategy managers may be becoming far more meaningful. At that time 90% or more of strategies tended to fail because they were ineffectively executed. Nowadays, with implementation often virtually guaranteed or insured against failure by penalty clauses, then execution is less obviously the most important side of the business, and the greater weight falls upon the decision makers and their advisers.
NB 2: Cisco has no traditional mobile wireless involvement though it is pushing hard in WLAN's, and Nortel originates on the voice side whereas Cisco is self- avowedly primarily a data company. Cisco's greatest strength traditionally has been in the enterprise and Nortel's with the carriers. In its main business of core routers, Cisco virtually only has Juniper as a snapping-at-the-heels competitor. Of course, all these businesses are very very slowly convergent and the two companies do in most cases have nominal competitive positions, even though most of these are not very real. Still, co-operation between the two companies does not look as ridiculous in practice as it might seem on paper |
