CISCO TO CREATE TWO COMPANIES IN SOUH AFRICA

Computing

The global networking giant Cisco is restructuring its local operations to create two new companies that will be 25% black owned. While Cisco's existing operation in SA will not sell any shares to local investors, the new structure will let it spin off equity in the two new divisions to black partners. Black managers will be appointed for those divisions, and a black advisory board is being set up to help the US multinational understand the local requirements and improve its empowerment and social responsibility efforts.

"We have decided to open two other companies, Cisco Capital and Cisco Advances Services," said Mark de Simone, Cisco vice-president for Africa and the Middle East. "Both will have a black empowerment component. Setting up two new companies and opening them to external black empowerment is a pretty important departure for us."

The exact structure of the black investment has not been finalised, so talks have not yet begun with potential partners. However, De Simone expects the deal to involve passive investors rather than active players in the industry. "We'd like to see pure investment. I think we'd rather separate the operational people from the investment transaction," he said.

Shares in the new divisions will be sold at fair market value, and the initial 25% black stake may be increased later. The reshuffle will see Cisco SA's black general manager Clive Fynn resign. The existing core division will be led by Steve Midgley, Cisco's director for the Middle East and Africa, with a new position of general manager for business development created.

De Simone said Fynn had done a good job in helping Cisco adapt to the local requirements and in persuading the American powers that be of the need to change. Fynn was leaving as he had other opportunities to tackle and because the new management structure had worked him out of a job.

The idea behind the new board of advisers was to have a panel of "wise men and women" to help with its social presence in SA. "We need advice on how we can help the country transform through what we do. We are beginning to meet the ambitions we have for the country in terms of our social investments and to get a better understanding by the likes of Telkom."

Cisco has been criticised in the past for a lack of empowerment. In one memorable clash, Telkom accused Cisco of massaging its degree of black management by counting the presence of Barron Cox, a black American seconded to the company.

The chairman of the advisory board had been appointed and would be named next month. "It's someone the country will know and feel comfortable with," De Simone said.

One of the new divisions, Cisco Capital, will offer financial services to help customers buy or lease equipment and to arrange credit for resellers who instal its equipment. It could have between 10 and 15 staff.

The advanced services division will house experts in more complex or newer technologies where there is currently a lack of skills. That would probably see technicians brought in from overseas to pass on their skills and handle projects, with 40 to 50 people in the division.

Cisco SA was last in the news for an internal rumpus when a former employee claimed that some managers had awarded a R25m contract to Imvula Con-sulting, then tried to buy shares in Imvula. When the employee's report was not acted on in SA, he escalated his complaint to executives in London, and Cisco appointed a legal firm to investigate. De Simone shrugged the issue off as a personality clash, saying: "We don't comment on internal issues."

Business Day