Cisco's Struggles Continue: Tech Weekly

REDMOND, Wash. ( TheStreet) -- Cisco ( CSCO) 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) 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) 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) 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.

Internet giant Google had a busy week, announcing Monday that it will offer new movies via YouTube and unveiling its plans for a cloud-based music service the following day.

"Your music collection is stored in the cloud, so that you can stop worrying about where your songs are and start enjoying your music," explained Google product manager Paul Joyce during a keynote presentation at the company's I/O developers' conference in San Francisco. "Having all my music available to me wherever and whenever is very powerful."

An eventual challenger to Apple's ( AAPL) iTunes, Music Beta by Google will initially be offered on an invitation-only basis to select U.S. users.

Google, which disclosed a $500 million charge related to a federal advertising probe on Tuesday, also said this week that it is releasing laptop computers that run the company's new Chrome operating system.

Google shares ended the week down 1.03% at $529.55.

In Apple news, the iPhone maker was crowned as the world's most valuable brand, according to Millward Brown's 2011 BrandZ study, released on Monday.

Apple has now overtaken Google as the most valuable brand in the world, not exactly a bolt from the blue given the phenomenal success of devices such as the iPod, iPhone and iPad. Apple's 2011 brand value was $153.29 billion, the study said, an increase of 84% from 2010. Google's value dropped 2% to $111.5 billion.

Apple's stock was down 1.75% at $340.5 on Friday.

Yahoo!'s ( YHOO) Chinese interests were under the microscope this week when it accused e-commerce giant Alibaba Group, in which it has a 43% share, of selling its Alipay unit to Alibaba's chief Jack Ma without its consent. Alibaba Group responded Friday saying that Yahoo! knew the sale was in the works for two years and that it was mandated by the Chinese government.

Shares of Yahoo! ended the week down 3.61% at $16.55.

The turnaround at Symantec ( SYMC) continued with the software maker's fourth-quarter results, which were posted after market close on Wednesday.

After overcoming its recent execution problems, Symantec offered healthy guidance and told TheStreet that it is seeing good growth in enterprise backup, hosted services and Data Loss Prevention.

Shares of Symantec closed down 1.76% at $20.06 on Friday.

Two of tech's biggest names are on deck next week, with Dell ( DELL) reporting its first-quarter results after market close on Tuesday and HP ( HPQ) posting its second-quarter numbers on Wednesday. Chip giant Intel ( INTC) also holds its investor meeting on Tuesday.

--Written by James Rogers in New York.

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