Big shoes to fill for Cisco's new chief

John Chambers' exit as chief executive of Cisco will leave only Amazon's Jeff Bezos as a big tech company boss who has continued in that role since the last dotcom boom and bust.

Recent years have seen changes at the top of Oracle, IBM, Microsoft, HP and Apple.

After 20 years of running Cisco, Mr Chambers on Monday announced his successor as Chuck Robbins and suggested that a return to the glories of the late 1990s - though not, presumably, the subsequent hangover - was again in sight.

Among the big beasts of Silicon Valley, Cisco was once the biggest - in March 2000, it topped Microsoft as the world's most valuable company. By a year later, however, Cisco's share price had lost more than three quarters of its value. Even today, after rising by some 27 per cent in the past year, the networking equipment company's valuation is still less than half what it was in those heady dotcom days.

As more and more devices are hooked up to the "internet of things" (or in Cisco's branding lingo, the "Internet of Everything"), the company again has the chance to be at the centre of the tech world, Mr Chambers said. "We are about to have the chance to do a repeat of the 1990s with the digital transition that is occurring," he said, before ordering Mr Robbins to "take us to the number one IT company".

Even as he vacates the chief executive's office to become executive chairman, it seems that Mr Chambers, 65, is still calling the shots. Mr Robbins, 49, who most recently served as Cisco's head of sales, has said that he plans to spend the next 90 days considering his strategic priorities before he takes up his new post in July.

But as a 17-year veteran who, like most Cisco employees, has known no other leader than Mr Chambers, Mr Robbins suggested that he would do little to change the course laid out by his predecessor, promising only to "accelerate" certain areas such as security and data analytics.

Some on Wall Street welcomed that continuity.

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Analysts at Cantor Fitzgerald bade an emotional farewell to a "tech CEO legend" who will "clearly be missed", paying tribute to Mr Chambers for increasing Cisco's revenues from $1.2bn in 1994 to $47bn last year, and increasing its stock price 15-fold in that time. "We believe he has created a strong bench of executive talent during his tenure," Cantor said in a note on Monday.

Others were more cautious. Goldman Sachs said that among the potential successors, Mr Robbins' skills were "most similar to . . . Mr Chambers in terms of customer relationships and leadership potential" but noted the "big shoes to fill".

JPMorgan wondered whether Mr Chambers would ever truly step out of those shoes. In a note, its analysts said he was "likely to maintain a hand in day-to-day operations at the company" and questioned "the extent to which Chambers is really handing the reins over".

Mr Chambers insisted on Monday that while he would still spend "50 to 70 per cent" of his time at Cisco, Mr Robbins "will be the CEO and will make the key calls".

Cisco's board spent 16 months considering who should succeed Mr Chambers, after he indicated his plan to retire about three years ago. Technology chief Padmasree Warrior, chief operating officer Gary Moore, and Rob Lloyd, president of development and sales, were all seen as other internal candidates for the job.

Rod McGeary, the Cisco board member who led the search, said Mr Robbins stood out for his "authentic leadership, cultural fit, technical acumen and vision".

While Mr Chambers described his successor as an "execution machine", some analysts said Mr Robbins - who ran Cisco's sales operations and network of resellers - had yet to prove he could muster the vision behind that execution.

Glenn O'Donnell, networking analyst at Forrester Research, said that while it was important to "establish a footprint" in the internet of things, there were more immediate challenges to deal with.

Cisco sells routers and the networking equipment that provides the backbone for much of the internet both inside companies and telecoms networks. In the corporate market, challenges include the explosion of cloud computing and the growth of "software defined networking" that allows commodity servers to take the place of dedicated switches such as Cisco's.

"Cisco cannot put at risk its extensive cash flow coming from its traditional businesses," he said. "It has to be shaken up and it has to move forward and [Mr Robbins] has to make a name for himself, but also not put that revenue at risk. It is a clear innovator's dilemma."

Mr Robbins said he would look to his fellow executives, customers and shareholders in figuring out how to strike that delicate balance.

"The market is moving too rapidly to think that any one individual can have all the answers," he said. "My goal, candidly, is making the next decade even more exciting than the last two."

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