Cisco Systems Inc. (CSCO:US) Chief Executive Officer John Chambers identified some of the senior managers that he and the board are considering as possible successors when he retires, a move that could come in two to four years.
There are as many as 10 candidates, and directors (CSCO:US) review the list quarterly, Chambers said in an interview yesterday at Bloomberg’s headquarters in New York. They include Gary Moore, chief operating officer; Robert Lloyd, executive vice president of worldwide operations; Chuck Robbins, senior vice president of the Americas; and Edzard Overbeek, senior vice president of global services.
Chambers has been CEO at Cisco since 1995, one of the longest tenures in the quickly shifting technology industry, and his remarks on succession underscore new openness to change at the top of the company. Chambers, 63, navigated Cisco through a rise that briefly made it the world’s most valuable company. He also guided it through the dot-com bust, the recent economic crisis and the advent of a fresh crop of competitors.
“You begin to look at how these transitions occur, and the job of the board and myself is to make sure this next one goes really smooth,” Chambers said. “Assuming the board wants me to, and assuming the shareholders do, I’ll stay on as chairman after that.”
Chambers ordered a management overhaul last year to stem profit-margin erosion and win back business lost to such competitors as Juniper Networks Inc. (JNPR:US) and Hewlett-Packard Co. (HPQ:US) Chambers said leadership changes are helping Cisco, the biggest maker of routers and switches that shuffle data traffic, prepare for a new CEO.
“You’re going to see me move our players around to get more responsibility,” Chambers said. “You’ll see us increase that overall. I can no longer bring up my leaders in silos.”
Chambers cited as an example the engineering responsibilities given to Nick Adamo, senior vice president in charge of global architectures and segments.
Moore, who joined Cisco in 2001 and became COO last year, would lead the company if the CEO was suddenly unable to continue his duties, in what Chambers described as the “hit by the bus” scenario. The next chief will probably come from within the company, Chambers said.
Culture and salary have helped the San Jose, California- based company retain executives even as competitors try to lure them away with compensation as high as five times what they get at Cisco, the executive said.
Even so, some top managers have exited in recent years. Ned Hooper, formerly chief strategy officer, left earlier this year to form an investment-partnership company. Susan Bostrom, previously chief marketing officer, departed last year. Charlie Giancarlo, the former No. 2 to Chambers, left in 2008 to join Silver Lake Partners. Jayshree Ullal, Mike Volpi and Tony Bates, who were all senior vice presidents, also departed in recent years, as did Hooper’s second in command, Charles Carmel, who left last year for Warburg Pincus LLC.
In some cases, the departures reflected dismay with a management structure that investors and former employees said slowed decision-making and contributed to market-share losses. Chambers took steps last year to dismantle the system.
Cisco shares (CSCO:US) slipped less than 1 percent to $18.58 at the close in New York. The stock has gained 2.7 percent this year.
Asked about the challenges facing Hewlett-Packard, which is struggling to reverse a slump that has cut revenue for four straight quarters, Chambers said that reviving the Silicon Valley icon is a “hard hand to play.” He said he would have advised Meg Whitman, CEO since last year, not to take the job.
“I like Meg Whitman a lot,” Chambers said. “She’s doing this purely out of the goodness of her heart, and I would have told her not to.”
Chambers also said Cisco plans to make small acquisitions to expand in areas such as video, collaboration, virtual data centers, mobility and security. The company said today that it acquired ThinkSmart Technologies, an Irish software company that delivers location data analysis using Wi-Fi technology. Terms weren’t disclosed.
Cisco won’t make large purchases (CSCO:US) of companies such as Citrix Systems Inc. (CTXS:US) or Red Hat Inc. (RHT:US), which Chambers said were too expensive. In storage, “we’re much more interested in partnering” than doing acquisitions, he said.
“If you watch where the network is growing -- with almost all the major technology trends, with big data, to mobility, to PCs going to tablets, to the Internet of everything, software- defined data centers -- we’re right in the center of almost every major transition,” Chambers said today in an interview on Bloomberg Television’s “In the Loop with Betty Liu.”
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