Cisco's strategy switch
Data networking powerhouse reportedly to give up partnership aims
June 23, 1998: 6:53 a.m. ET
Lucent sues Cisco for patent infringement - June 19, 1998
Nortel buys Bay Networks - June 15, 1998
Cisco Systems
Lucent Technologies
Northern Telecom
More related sites... NEW YORK (CNNfn) - Marking a key strategic shift, Cisco Systems Inc. reportedly has abandoned plans to partner with a key rival and will go it alone in an effort to meet demand for high-speed data networking equipment.
Despite recent efforts, the San Jose, Calif.-based maker of Internet switches has given up on plans to link up with networking gear rivals Lucent Technologies Inc. or Canada-based Northern Telecom Ltd., or Nortel, The New York Times reported Tuesday.
The new tack at Cisco comes amid a tense legal climate and a network equipment industry in seemingly full-tilt buyout mode.
Last week, Lucent hit Cisco with a lawsuit claiming it infringed on eight of its patents. And Nortel recently agreed to buy Internet gear maker Bay Networks - Cisco's primary rival in Internet switching equipment - for $9.1 billion.
John Chambers, Cisco's chief executive officer, laid out the go-it-alone strategy to the Times in an interview Sunday. The company is expected to air details of the new strategy in a memo to Cisco's 12,000 employees Tuesday.
Chambers last year hoped to carve up demand for networking equipment through partnership with either Lucent or Nortel. He envisioned Cisco focusing on Internet switches while the partner stuck to traditional phone switches and corporate communication systems.
But those two potential partners, eyeing the hefty growth prospects of Internet-based data communications for themselves, each rebuffed the plan, according to the report.
Cisco shares (CSCO) ended Monday at 84-5/8, up 1-1/2 in Nasdaq trading. Lucent stock (LU) gained 2-1/2 at 74-3/4 and Nortel stock (NT) rose 1 to 53-15/16 in New York Stock Exchange trading.
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