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John Chambers Reveals What's Wrong With Cisco

Thursday, 7 Apr 2011 | 1:32 PM ET

After having reported a series of disappointing quarters, Cisco Systems CEO John Chambers on Thursday finally put a final point on what's troubling the technology giant, CNBC's Jon Fortt reports.

Chambers said lower margin, new switching technologies are cannibalizing one of Cisco's core businesses, Fortt reports. He added that internal communications need to be more clear, Fortt noted. The 62-year-old executive also addressed growth.

Cisco Systems chairman and CEO John Chambers speaks during a press event at the 2010 International Consumer Electronics Show in Las Vegas, Nevada.
Getty Images
Cisco Systems chairman and CEO John Chambers speaks during a press event at the 2010 International Consumer Electronics Show in Las Vegas, Nevada.

"When you're growing, let's just say for purposes of discussion, in the high teens, you can afford to bet in many areas. When you're growing in a lower number—just for purposes of discussion, let's cut that number in half—you can't afford many of the areas," Chambers said. "So we're going to cut back on the number of priorities, get very focused on our top five [and] grow it through."

Cisco shares fell after Chambers made the comments Thursday morning.

It almost seems as though Chambers has admitted there's a problem, CNBC's Melissa Lee noted. The comments suggest he needs to take action, or shareholders will likely make changes to management, she added.

Stuart Frankel's Steve Grasso agreed. He currently has a small position in Cisco.

"I would trade these things where if you see a pop, sell it," Grasso said. "Take a little off and then I would buy it back on the dips."

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STOCK OF THE DAY: CONSTELLATION BRANDS

Chambers on Growth, Stock of the Day
Cisco CEO John Chambers says lower- margin, newer switching technologies are eating into Cisco's profits, and lays out a plan to fix the company's switching business, reports CNBC's Jon Fortt. Also, the Stock of the Day, with Constellation Brands CEO Rob Sands.

For Thursday's "Stock of the Day" segment, Constellation Brands CEO Rob Sands joined the "Fast Money" desk.

Watch the video to see the full interview—it starts at 1:48 on the left.

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RETAIL WINNERS

Retail Winners
Deborah Weinswig, Citi analyst, looks at the retail picture and says department stores are performing very well while the companies that will be hit by rising gas prices are lower-end retailers. Also, Pops & Drops.

Citi analyst Deborah Weinswig on Thursday looked at the retail picture while appearing on the "Fast Money Halftime Report."

Weinswig said department stores are performing very well. Companies that will be hit by rising gas prices, however, are lower-end retailers.

Get her full thoughts by watching the video.

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Trader disclosure: On April 7, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Cortes owns (GS), (SDY), (EXC) and (SO). Steve Cortes is long 10 yr. notes. STeve Cortes is long U.S. Dollar vs. Euro vs. British Pound. Steve Cortes is short (F). Steve Cortes is short (BAC). Steve Cortes is short nasdaq. Steve Cortes is short (TOL). Steve Cortes is short EUR/CHF currency cross. Steve Cortes is short Wheat.

Comcast Is The Parent Company Of CNBC
Comcast Is The Parent Company Of NBCUniversal
GE Owns 49% Of NBCUniversal
GE Owns 49% Of CNBC

Len Brecken SOT from Fast Money 4/6/11
Brecken is short (NFLX)

Steven Grasso
Stuart Frankel & Co and its partners own (CUBA)
Stuart Frankel & Co and its partners own (EWJ)
Stuart Frankel & Co and its partners own (GERN)
Stuart Frankel & Co and its partners own (HPQ)
Stuart Frankel & Co and its partners own (HSPO)
Stuart Frankel & Co and its partners own (MSFT)
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Stuart Frankel & Co and its partners own (UAL)
Stuart Frankel & Co and its partners own (XRX)
Stuart Frankel & Co and its partners are short (QQQQ)
Stuart Frankel & Co and its partners are short (AAPL)

Brian Kelly
Accounts Managed by Kanundrum Capital are long (EBAY)
Accounts Managed by Kanundrum Capital are long (ATW)
Accounts Managed by Kanundrum Capital are long (FXE)
Accounts Managed by Kanundrum Capital are long (GLD)
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Accounts Managed by Kanundrum Capital are long gold futures
Accounts Managed by Kanundrum Capital are long silver futures
Accounts Managed by Kanundrum Capital are long wheat futures
Accounts Managed by Kanundrum Capital are long euro
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Accounts Managed by Kanundrum Capital are short U.S. Bond futures
Accounts Managed by Kanundrum Capital are short copper futures

David Hilal
FBR Captial Markets Is A Market Maker In (CRM)

Deborah Weinswig
An Employee Of Citigroup Global Markets Or Affiliates Is A Trustee Of (TGT)
Citigroup Global Markets Was A Financial Advisor To Catalyst Health Solutions In Agreement With Walgreen Co.
Citi Employees Own (HD), (WMT)
Citigroup Global Markets Or Affiliates Owns 1% Or More Of (SKS), (SVU), (TGT)
Citigroup Glboal Markets Or Affiliates Managed Or Co-Managed Offering Of (DG), (HD), (TGT), (WMT) In Past 12 Months
Citigroup Global Markets Or Affiliates Have Receieved Investment Banking Compensation In Past 12 Months From (DG), (HD), (KR), (TGT), (WMT)
Citigroup Global Markets Or Affiliate recieved Non-Investment Banking Compensation In Past 12 Months From (DG), (HD), (JCP), (KSS), (KR), (M), (SWY), (SVU), (TGT), (WAG), (WMT), (COST)
(DG), (HD), (KR), (TGT), (WMT) Are Or In Past 12 Months Were Investment Banking Clients Of Citigroup Global Markets
(CVS), (DG), (HD), (JCP), (KSS), (KR), (M), (SWY), (SKS), (SVU), (TGT), (WAG), (WMT), (COST) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets (Non-Securities Services)
(DG), (HD), (JCP), (KSS), (KR), (M), (SWY), (SVU), (TGT), (WAG), (WMT), (COST) Are Or In Past 12 Months Were Non-Investment Banking Clients Of Citigroup Global Markets (Non-Securities-Related Services)
Citigroup Global Markets Or Affiliate Recieved Compensation From (DG) In Past 12 Months
Citigroup Global Markets Is A Market Maker In (CVS), (M), (COST)
Citigroup Global Markets And/Or Affiliates Has A Significant Financial Interest In Relation To (CVS), (DG), (HD), (JCP), (KSS), (KR), (LOW), (JWN), (SWY), (SKS), (SVU), (TGT), (WMT), (COST)
CItigorup Global markets Or Affiliates Owns 10% Or More Of (SKS)

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