Cisco veteran Robbins to take over as CEO from Chambers
May 04, 2015 06:28 PM EDT
May 04, 2015 06:28 PM EDT
Cisco Systems Inc Chief Executive John Chambers will step down in July after 20 years at the helm of the network equipment maker, a symbol of the dot.com stock boom 15 years ago now struggling to boost its bottom line in the era of cloud computing.
Company veteran Chuck Robbins, 49, will take over as CEO. The 65-year-old Chambers, one of the longest-serving leaders of a Silicon Valley company and also company chairman, will become executive chairman, the company said on Monday.
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.
Chambers never managed to revive those glory days despite forays into consumer electronics and other areas. Cisco's market value is now about $150 billion, and its annual operating profit is around where it was five years ago. It is expected to post sales of $49 billion this year.
Cisco said the timing of the announcement was not related to its quarterly earnings report, scheduled for May 13, and it did not alter its financial outlook.
Chambers, a prominent Republican backer who was a co-chair for Senator John McCain's 2008 bid for president, did not indicate any plans to go into politics.
"I will probably support people (for) political office but probably not get involved myself," he told reporters.
Chambers said he started thinking about retiring as CEO about three years ago. He seemed relaxed and joked with longtime colleague Robbins during the call.
"Chuck is just an execution machine," said Chambers, using business jargon for someone who gets things done.
Robbins joined Cisco in 1997 and became a board member on Friday.
His latest role has been senior vice president of worldwide operations, running global sales for the company. Analysts hope Robbins' elevation will mean a renewed focus on sales.
"We like that Cisco is appointing someone as CEO that has a strong sales background, and we expect the employee base to be very supportive of the appointment," said Tim Long, an analyst at BMO Capital Markets.
Cisco has been looking for a new CEO for the past 16 months, board member Roderick McGeary wrote in a company blog post detailing the hiring process. (bit.ly/1JLIPup)
Some industry watchers were surprised at the choice. Rob Lloyd, Cisco's director of development and sales, was more visible to investors, JMP Securities analyst Erik Suppiger said in an interview.
Chambers declined to name other potential candidates, or whether any such as Lloyd would stay at the company. Lloyd did not immediately return a request for comment.
Chambers is the second high-profile U.S. technology executive to step aside from the top job in the past eight months. In September, database software maker Oracle Corp's CEO, Larry Ellison, announced his plan to become executive chairman.
Chambers has increased Cisco sales to about $48 billion from $1.2 billion since he became CEO in 1995.
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