Cisco Seen as 'Ripe for Some Sort of Activist Assault'

Cisco Systems, which has shed 35 percent of its market valuation over the last year and has become the worst performing stock in the Dow Jones Industrials, "is ripe for some sort of activist assault," Rob Cox, columnist at Reuters Breakingviews, told CNBC on Tuesday.

Rob Cox
Rob Cox

"If you look at the shareholders, they've been suffering ... for years. It's been dead money for a decade—that's despite spending $70 billion dollars on buybacks, $35 billion dollars on acquisitions," Cox said.

"This company is ready. If you look at it, it has no major shareholders, its [CEO] John Chambers who's been running it for 16 years [has less than 1 percent]," he added.

If you are an activist, the strategy is to stop the misallocation of capital and to focus on the core business, he explained. "You can't just be a blowhard. You got to get out there and you got to be someone who's got a proven track record of getting on the board, working with the board members and working with the company to improve the operations," he explained.

In addition, Cox went on to say that Chambers sent out an email late Monday to Cisco staff that "sounds like" the CEO is preparing for "the worst" in terms of shareholder activism.

"If John Chambers is to do many of the things that we think—and I think shareholders would agree—would actually get the stock back up to something like an IBM type of price-to-earnings multiple? To do that he's going to have to repudiate a lot his [past] strategy," added Cox.

At the same time, Cisco has a $94 billion market cap. "It still has like two-thirds of its core market—routers and switchers—which is very profitable, but it's gone on a real tear with all sorts of things inside the home, consumer stuff," Cox concluded.

Follow Strategy Session on Twitter: @CNBCStrategy

Watch CNBC's "The Strategy Session" weekdays at Noon ET.