NEW YORK — Technology stocks rose Wednesday after the chief executive of Cisco Systems promised to take “bold steps” to narrow the company’s focus.
Cisco rose 5 percent, the most of any stock in the Dow Jones industrial average. CEO John Chambers said in a memo to employees that recent missteps were “unacceptable.”
To help streamline the company, Chambers elevated Gary Moore to chief operating officer in February, creating a new position. Cisco has shed the “accountability that has been a hallmark of our ability to execute consistently” for customers and investors, Chambers said in the memo. Cisco will embark on a series of changes aimed at revamping leadership and making it easier for customers and partners to work with Cisco, he said.
“We have disappointed our investors and we have confused our employees,” Chambers, 61, said in the memo. “Bottom line, we have lost some of the credibility that is foundational to Cisco’s success — and we must earn it back.”
The changes may include selling or spinning off Cisco’s consumer business, said Ehud Gelblum, an analyst at Morgan Stanley in New York, in a report. That unit includes Pure Digital Technologies, the maker of the Flip video camera.
Analysts say the company is overly reliant on revenues from state and local governments. Chambers promised that major changes were coming, although he offered few specifics.
“We believe Cisco may be better off splitting itself into two or more businesses with different targets for growth and margin,” Gelblum wrote in a note dated Tuesday.
The Dow Jones industrial average rose 32.85, or 0.3 percent, to 12,426.75. The Standard & Poor’s 500 edged up 2.91 points, or 0.2 percent, to 1,335.54. The Nasdaq composite rose 8.63 points, or 0.3 percent, to 2,799.82.
Other technology companies also rose. Hewlett-Packard rose 2.2 percent, while Microsoft and chipmaker Qualcomm each rose more than 1 percent. Broadcom gained 3.9 percent after an Oppenheimer analyst said the semiconductor company would benefit from higher sales of mobile phones.
Energy companies fell the most out of any group within the S&P 500 index. Halliburton and Baker Hughes each lost more than 2 percent. The Energy Information Administration said U.S. crude supplies grew more than expected last week, rising by 2 million barrels.
Robert Russell, president of wealth- advisory firm Russell & Co., said he expects higher commodity prices to hurt profits. “The U.S. markets are running on fumes at this point,” he said. “There’s going to be more of a strain on corporate earnings.”
