Media Moves

Coverage: New head at Cisco

May 5, 2015

Posted by Liz Hester

John Chambers is stepping down as head of Cisco, the company he’s run for the past 20 years. He named long-term veteran Charles Robbins to take his post.

The New York Times story by Quentin Hardy had these details about the moves:

After 20 years of running Cisco Systems, John Chambers is stepping down as chief executive of the networking equipment maker. But he isn’t going far.

Cisco said on Monday that Mr. Chambers, 65, will in July become executive chairman and also serve as chairman of the company’s board. Mr. Chambers’s successor as chief executive is Charles Robbins, who joined Cisco in 1997 and currently serves as the head of worldwide sales.

Underlining Mr. Chambers’s still-influential role at Cisco, the world’s premier maker of gear that powers the Internet, the company said its longtime leader would spend time supporting the new chief and “engaging closely with customers and governments around the world.”

Investors appeared to take the news in stride. Cisco stock was trading at $29.28, up about a half a percent, in early afternoon trading.

Bill Rigby wrote for Reuters that the move could bring a shift in strategy:

Wall Street analysts said a change was expected and could signal a refocusing of Cisco, which acquired dozens of companies under Chambers but has failed to make great headway outside its core networking business.

“In many cases where the CEO has been very acquisitive, the next guy pares down and refocuses the company, and that is what I would be expecting with this change,” said Kim Forrest, an analyst at Fort Pitt Capital Group in Pittsburgh.

Robbins did not immediately indicate where that focus would be. “Over the next 90 days, I (would) actually like to listen,” he told reporters on a conference call. “The market is moving too rapidly for any one individual to think they have all the answers.”

Shares of Cisco, based in San Jose, California with about 70,000 staff, were up 0.4 percent at $29.24 on Nasdaq.

The company became a stock market sensation at the height of the technology boom in March 2000 when its market value passed $600 billion, based on the company’s diluted share count at the time, and briefly topped that of Microsoft Corp.

The Fortune story by Andrew Nusca reported that Robbins has been running one of Cisco’s largest units:

Robbins joined Cisco in 1997. In his most recent role, he was responsible for the company’s global sales and partner team, which Cisco says drives $47 billion in business. He is credited with executing the company’s partner program and establishing a strategy for its commercial business segment, which now represents 25% of Cisco’s business. He was also a sponsor for Cisco’s acquisition of Sourcefire and Meraki.

As for Chambers, who has enjoyed one of the longest tenures as CEO in the technology industry (if not the entire Fortune 500), he will devote his time to “supporting Robbins and engaging closely with customers and governments around the world, with a focus on leading Cisco’s role in country digitization,” Cisco said. In September 2014, Fortune published a story about Chambers’ impact on the industry.

The Bloomberg story by Peter Burrows offered these details about Robbins and his leadership:

Robbins, 49, has helped lead the computer-networking company to a resurgence in the past year by responding to competition with new products, including software that could help offset falling margins for Cisco’s hardware.

The stock was the sixth best performer in the Dow Jones Industrial Average last year, though the shares had gained only 15 percent over the previous decade. Robbins, one of Chambers’s closest confidantes, had been identified among 10 possible candidates for the CEO post as early as 2012.

Robbins plans to accelerate Cisco’s efforts in areas such as security software while playing close attention to operational details, he said in a call with analysts.

“When Cisco gets into execution mode, we can be pretty unstoppable,” he said.

Chambers follows other executives handing over the reins after running tech bellwethers for long stretches. Oracle Corp.’s Larry Ellison last year was succeeded by Safra Catz and Mark Hurd after more than 35 years at the helm. Satya Nadella last year took over from Steve Ballmer, who was CEO of Microsoft Corp. for more than a decade.

As CEO of Cisco for two decades, Chambers was one of the most prominent spokesmen for the boom that transformed the Internet into a network that redefined how we work, communicate and get entertainment.

While the move has been expected for a long time, it’s likely hard for Chambers to leave the helm of the company he built. And the two seem close, so it will also likely be a challenge for Chambers to fully step away and for Robbins to run the company. But Cisco needs to show some growth and perhaps this is the way to make it happen.

Subscribe to TBN

Receive updates about new stories in the industry daily or weekly.

Subscribe to TBN

Receive updates about new stories in the industry.