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Cisco's Struggles Continue: Tech Weekly

REDMOND, Wash. ( TheStreet) -- Cisco (CSCO - Get Report) was, once again, the big story of the week after it reported underwhelming third-quarter numbers following market close Wednesday. Despite beating earnings estimates, Cisco delivered a weak outlook for a third consecutive quarter, and saw its shares tank.

Cisco also provided additional details of its restructuring plan on its conference call. The company said it plans to implement a headcount reduction this summer and that it's targeting $1 billion in cost reductions by the end of fiscal year 2012.

Cisco CEO John Chambers says that the embattled networking giant has a lot of work ahead of it.

The tech giant's switch sales were down 9% year over year, as rivals such as HP (HPQ) and Juniper (JNPR) increasingly target its customers.

The public sector also remains a major area of weakness for Cisco, although the company's routing and services businesses were robust.

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Cisco is taking its long-term growth rate target of 12% to 17% off the table, according to CEO John Chambers, who warned that the company needs to become much more agile. "We have to move faster," he said. "It's my responsibility, the buck stops here -- I get it."

The gearmaker's shares ended the week down 0.3% at $16.88.


Microsoft (MSFT - Get Report) kicked off the week with a major piece of M&A, spending $8.5 billion to acquire Skype, squaring up to Cisco's WebEx and Apple's (AAPL - Get Report) FaceTime products.

The all-cash deal injects a much-needed adrenalin shot into the software giant's mobile strategy. Combined with Microsoft's Nokia (NOK - Get Report) alliance, the Skype deal could be a shrewd move, increasing the pressure on the fledgling FaceTime technology and Google's (GOOG) Google Voice.

"Everything has been shifting away from Microsoft," said one analyst earlier this week, referring to the company's failure expand beyond its dominance of the PC era. "They need to make acquisitions, since nothing else has worked."

Skype is the leading international Internet calling service with 663 million registered users, 170 connected users and 8.8 million paying customers.

Microsoft, however, was not the only tech giant interested in Skype. As eBay (EBAY) explored its options to carve out Skype last year, Verizon (VZ) was one of the players that sniffed around, according to people familiar with the Skype spinoff.

Microsoft shares closed the week down 1.15% at $25.03 on Friday.

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