This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Will Cisco's Chambers Stretch the Innovation Envelope?

Stocks in this article: CSCO HPQ IBM EMC VMW

SAN JOSE, Calif. ( TheStreet) -- Cisco (CSCO - Get Report) may have paid a heavy price for its bold push into consumer video, but the networking giant can still drive innovation in its core markets, according to experts.

The tech bellwether, which reports first-quarter results after the markets close on Wednesday, is slowly emerging from a major restructuring effort, which involved ditching the Flip video camera, layoffs, and a massive revamp of its management, sales, services and engineering.

Cisco, led by John Chambers, can still drive innovation, say analysts.

Already, though, analysts are wondering where Cisco CEO John Chambers will stretch the company's innovation envelope.

"I think that Cisco will move ahead by pressing additional 'intelligence' into next-generation network and fabric solutions," explained Charles King, principal analyst of tech research firm Pund-IT. "This is total speculation on my part, but we have seen lots of pieces of this come up over the last few years, whereby Cisco could build server and storage capabilities into network switches."

Specifically, King points to Cisco's VCE partnership with storage maker EMC (EMC - Get Report) and its VMware (VMW - Get Report) subsidiary as evidence of the company's desire to fuse servers, storage and networking. Aimed at firms looking to quickly build out their cloud infrastructure, the pact centers on pre-packaged blocks of hardware and software, dubbed Vblocks.

Turning switches into a sort of Swiss army knife for the data center, however, would be a major leap forward, reducing customers' need to buy additional gear. Inevitably, this would rile server and storage giants such as Hewlett-Packard (HPQ - Get Report) and IBM (IBM - Get Report).

Brian Marshall of ISI Group agreed that super-switches could be on the agenda for Cisco, but, like King, acknowledged that they could be some time off.

"I think we're going to see notions like this with the advent of Software-Designed Networking (SDN)," explained Marshall, pointing to an emerging technique for managing network data flows through software. " But I think it's going to be years before we see an architectural switch in enterprise infrastructure."

Nonetheless, Marshall pointed to Cisco's healthy track record of innovation such as the controversial Unified Computing System (UCS), which shattered its relationship with long-standing server partner HP.

"Not everything has failed at Cisco," explained the analyst. "They were the first to load servers with a great amount of memory and, out of nowhere, UCS servers have gone on to gain a great chunk of the market."

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs