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Seven Cisco bad luck happenings in '07

Seven Cisco bad luck happenings in '07

Ranging from the departure from Cisco of a high-flying exec to a wireless LAN data flooding to some major problems with Cisco VoIP equipment.

No. 5: Why won't Cisco meet with the used equipment community?

If there is one subject that is guaranteed to get the Cisco community hot under the collar, it's the used equipment marketplace. EBay and the like have a ton of hot (and the operative word is 'hot') deals on "genuine" Cisco equipment, while the used equipment dealers who get their gear by honest means say they are doing good business by offering products at a fraction of the cost quoted by Cisco and its resellers. Meanwhile, Cisco is working to stamp out counterfeit Cisco goods through its Cisco Capital Remarketing initiative.

In April, the United Network Equipment Dealer Association (UNEDA), which counts 300 members from the used Cisco dealer community, posted an open letter to Cisco (via the Cisco Subnet forum) asking the networking giant to meet with its directors to thrash out a way to "eradicate counterfeit and black market goods from the networking industry." UNEDA argues that, like Cisco, it too is focused on stamping out counterfeit goods and that its members work to a code of conduct and are thrown out of UNEDA if they don't follow the rules. But so far, Cisco has declined the invitation.

Cisco Subnet blogger, Ken Presti, who focuses on the channel thinks both parties should talk. He wrote: "I believe that opening dialogue can be a constructive step. That dialogue does not have to disclose serial numbers or other information that Cisco uses to separate the genuine from the counterfeit. So the secrets can be kept safe and the refurbished equipment program kept intact. Don't expect any immediate miracles. But maybe there's a way for both sides to gain some ground through discussion. Balancing Cisco's interests with the interests of the authorized channel leaves the unauthorized channel with very little leverage -- especially in view of counterfeiting and some of the unfortunate actions that have taken place in the used equipment dealer community-at-large. But while dialogue does not always lead to conflict resolution, conflict resolution always begins with dialogue."

By refusing to meet with UNEDA is Cisco shooting itself in the foot?

No. 4: Cisco's traditional bread-and-butter business is slowing down

The first inkling this year that Cisco is having a hard time selling its bread-and-butter enterprise equipment came in April when Barron's Online reported on a research note written by JMP Securities analyst Samuel Wilson. According to Wilson, Cisco sales staff had expressed concerns about making their fiscal third quarter numbers, and that many resellers believe that US enterprise customers had begun to delay discretionary spending. Fast foward to November, and although Cisco posted fiscal first-quarter profit in line with estimates, it also reported that sales from its 25 largest US customers had declined. Eight of those customers are financial services companies suffering from the mortgage crisis.

No. 3: Scammers using Cisco to make a quick buck

Whether you're a famous A-list celebrity or a leading networking equipment vendor, you're bound to get scammers trying to make a quick buck from your hard work. This year, several scammers were caught taking advantage of Cisco:

  • In January, a man in Massachusetts, and former worker at Hanscom Air Force Base was sentenced to more than four years in prison for scamming Cisco out of more than US$4.7 million.
  • In February, federal investigators arrested a 53-year-old man for allegedly efrauding Cisco. Michael Daly, whose office is in Salisbury, Mass., was accused of using fake business names and addresses in at least 39 states to make about 700 false claims of defective products for which Cisco sent replacements. After getting the replacement products, Daly sold them on the Internet for profit, according to a news release from the FBI.
  • In March, a computer technician was arrested on charges with defrauding Cisco of more than US$10 million by cheating one of the vendor's programs for replacing broken or defective parts.

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