Should Cisco learn from HP and eBay and make the move to split up

18.11.2014 Benjamin Gubler

Cisco is much too big and cumbersome in its current state to be a true competitor in a world of IT vendors who are on the down-scale, according to RBC Capital Markets.

John Chambers (CEO of Cisco) has stated that he wants Cisco to be the largest IT vendor in the galaxy. RBC Capital Markets Analyst Mark Sue thinks Chambers should break it up instead of growing it further.

Hewlett-Packard is already rebranding itself into an enterprise company and a PC-and-printer vendor, eBay is detaching PayPal as a separate company, and Elliott Management is pushing EMC to make VMware into its own brand.

Big companies are under tremendous pressure to “maximize shareholder value” by breaking themselves apart, it has become apparent and Mark Sue believes that splitting up Cisco could push the stock to $40 per share or more for the first time in over a decade.

Unlocking value in growth areas such as the internet of things, wireless and security arenas is also made possible with this move, so the prediction goes. “eBay, Agilent, JDSU and even HP this morning get high marks from investors for their ability to adapt to a changing World”

What is understood is that Cisco may put its traditional networking hardware such as routers and switches along with the services they provide to compliment these into a Cisco Solutions entity. Putting the more forward geared above mentioned internet services and mobile gear into a separate Cisco Cloud enterprise will then be a manageable task.

It’s easy to talk and Wall Streeters took no time to think about weighing in on these tough management decisions, but talking is easy. For the record, it was stated by a Cisco spokesperson that they feel very good about their company strategy, their leadership, their innovation and their opportunities.

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