John Chambers talks of 'tough decisions' on Cisco's future

In a blunt address to analysts, John Chambers has outlind his investment and business plans that will, he hopes, invigorate Cisco.

The chief executive told investors and analysts that the company had suffered from poor operational management, despite having good ideas.

Cisco will streamline management in the next few months, Chambers said, and pull back on some current areas of business while expanding others.

"There are areas we just have to fundamentally change," Chambers said during a Wells Fargo investment conference in San Francisco, the San Jose Mercury News reports.

"I give us high marks for innovation. Where we have to do better, I'd say, is operational excellence."

Chambers explained that Cisco will focus on five core areas: network routing and switching; business collaboration tools; cloud computing; computer system architecture; and video communication. Video investment in particular will be "doubled down", he said.

Chambers also highlighted computer security and smart grid technology as areas where the company will continue to invest, since they are central to the industry's future. Cisco will also begin selling tablets soon.

But Chambers was silent on the future of Cisco's consumer products, such as the Flip video camera and Linksys home networking products, which are performing poorly and which some analysts say should be dropped.

"We'll make tough decisions," Chambers said, but reassured listeners that Cisco will do its utmost to minimise disruption and handle the situation "with class".

Three days ago, Chambers sent a similar warning to Cisco staff via an internal memo, warning of impending change. Cisco's share price dropped sharply on the news, but was up over one per cent at the end of today's trading.