. They cite a huge cash hoard (some 25 per cent of market cap) and Cisco's dominance in its historical 'core' product markets. They hope that a revived economy will create an uptick in infrastructure spending by corporations and public entities or big buying in emerging countries. Detractors become vitriolic about the company's lost valuation, blaming Chairman/CEO John Chambers in articles like Cisco, Either Chambers Goes or I Go. Their arguments are less about product miscues and more intensely claiming that the CEO misdirected funds into bad consumer market opportunities (Flip phone), undeveloped new projects like virtual conferencing and an overly complicated organisation structure. What Cisco really needs is more new products in growth markets. Places where demand is growing and the company can flourish like it did in the heyday halcyon growth days of the internet. That was why CEO Chambers implemented a market-focused organisation structure, complete with multi-layered committees, in an effort to seek out growth opportunities and fund them. Only, the organisation lacked the permission and resource commitment to really allow developing most new markets and was overly complex in the resource allocation process. Instead of moving rapidly to identify and develop growth, the organisation stalled in endless discussions. A couple of months ago, the new organisation was gutted in a 'refocusing' effort (typical reaction: BusinessInsider.com's Cisco's Crazy Management Structure Wasn't Working, So Chambers is Changing It). But, if the previously more open organisation couldn't find permission to identify, fund and develop new markets, how will a 'more focused' organisation do so? Focus isn't going to make companies (or households) buy more switches and routers. Or buy more network consulting services. The market has shifted. As people move to smartphones and tablets and cloud-based apps, they access over common networks. So, how will an organisation, focused on old customers and products, prove to be more successful? While the old organisation may have been problematic, is abandoning a market-focused organisation going to be an improvement? Sounds like a set-up for future layoffs. In the drive for new products, Cisco bought a very successful business in the Flip camera two years ago, which, according to MediaPost.com, had 26 per cent market share. But, details the story of how Cisco was too late. The market was shifting quickly from digital cameras to smartphones, and sales stagnated. Cisco didn't learn much about consumer products or smartphones or how to launch new products outside its 'core' from the experience, choosing to shut the business down and withdraw the product this spring (Cisco Kills the Flip Camera). Ouch! Clearly, Flip was a financially unsuccessful venture. But that could be forgiven if Cisco learnt from the experience, so that it could move, like Apple, toward launching something really good (like Apple did with iPods). But we don't hear of any organisational learning from Flip, just failure. And that's too bad, because Cisco's virtual conferencing could have great promise. Most of us now hate to travel (thanks TSA and all that great airline service)! And most corporate controllers hate to pay for business travel. The trends all point toward more and more virtual conferencing. For everything f om one-on-one meetings to multi-site meetings to industry conferences for learning. This is a BIG trend, which will go well beyond a simple WebEx. Someone is going to make money with this taking Skype to an entirely new level of performance. But given how badly Cisco managed Flip, and the new 'refocusing' effort, it's hard to see how that winner will be Cisco. Cisco is not yet a Sun Microsystems, so locked-in to old products that it cannot do anything else and unable to grow at all. It's not yet a Dell or Microsoft which has missed the market shifts and is trying to spend too much money, too late, on weak products against well-funded, fast-growing and profitable competitors. But the signs don't look good. There's no discussion about what Cisco sees itself doing new and differently in five years. We don't see Cisco offering leading-edge products like it did 15 years ago in its old 'core' market. Its historical market is not growing like it once did, and new competitors are changing the market entirely. The layered organisation was an effort to attack old sacred cows and limit the power of old status quo police, but now, the new 'focused' re-organisation is reversing those efforts to find new markets for growth. 'Focus' rarely goes hand-in-hand with successful innovation. We cannot find an obvious group of people focusing on new markets, with permission and resources to bring out the 'next big thing' that can drive a doubling of revenues by 2017. Unlike RIMM, the game isn't over for CSCO. Its markets still have some longevity. But the organisation has been failing at doing the kind of new things, bringing out the new innovations, which will make it a good investment. Until the management shows that it knows how to find new markets and launch disruptive innovations, CSCO is not a place to invest. Don't expect a fat dividend and don't expect revisiting old growth rates any time soon. There are likely to be some good and bad quarters. Cost management, and occasional big orders, combined with manipulating the timing of revenues and costs, will allow for the management to say "things are all better." But there will be miscues and problems, and blaming of competitors and weak economic conditions in the bad quarters. Defend-and-extend management does not work when markets shift. Sideways is not moving forward. It's more like treading water in the ocean not a good strategy for rescue. Overall, I wouldn't be optimistic.