Cisco is in the midst of a 120-day review of its entire product portfolio to look for cost savings and businesses it doesn't belong in, such as the Flip video camera unit that was recently shut down. The company said it is now clearly focused on routing, switching and services; collaboration; data center virtualization and cloud; video; and business process architectures.

"No excuses: We must act quickly, we are, and we will," Chambers said.

In addition to public-sector sales, the company's biggest pain points include its consumer business, which is already being reorganized, and enterprise switching. In particular, the introduction of the Nexus 7000 line of switches has cut into Cisco's profit margins, Chambers said. He disclosed that the gross margin on one of these switches is 18 percentage points less than for the earlier Catalyst 6000 line, which was the mainstay of the company's enterprise Ethernet business for many years. In addition, buyers typically need fewer of the new switches because they can accommodate more ports, he said.

However, Cisco intends to maintain its market-share leadership in switching, Chambers said.

"We do not underestimate the transition in front of us," Chambers said.