Reorg Rips Through Cisco's Ranks

Russo: down. Kennedy: out. Ullal: up. And Mazzola is promoted over Volpi

August 23, 2001

4 Min Read
Reorg Rips Through Cisco's Ranks

Cisco Systems Inc. (Nasdaq:CSCO) this afternoon announced a complete corporate reorganization inwhich it will convert its existing line of business structure (organizedaround service provider, enterprise, and commercial customers) to acentralized engineering and marketing organization.

"Our line of business structure has served us very well in the past, whencustomer segments and product requirements were very distinct. Today, thedifferences have blurred between these customer segments," said JohnChambers, president and chief executive officer of Cisco Systems, in apress release issued at 4:32 pm Eastern Time.

Two executives from Cisco's enterprise line of business won big positionsin Cisco's optical networking business and its overall executive managementteam as a result of the shakeup.

Mario Mazzola, an eight-year Cisco veteran, has been named chiefdevelopment officer, overseeing the 11 new technology groups that will beformed as a result of the reorg. He will report directly to Chambers.Mazzola was formerly in charge of Cisco'snew business ventures group. (As such he was the mastermind behind Cisco's"Andiamo" storage networking caper. See: Cisco’s Secret SAN Strategies Revealed).

Jayshree Ullal takes over from Carl Russo, who is stepping down as groupvicepresident, optical networking. Russo will now report to Ullal.

Russo came to Cisco via its acquistion of Cerent and was recently namedthe Number 1 Mover and Shaker in optical networking by this publication (see The Top Ten Movers and Shakers in Optical Networking )"I'm not going anywhere," Russo told Light Reading in an interview thisafternoon. "My perception of the opportunity in front of us is actuallybetter than it's ever been.

"On a personal note, I don't want to be in an operating role. Jayshreehas the combination of background and capability and reputation to do thejob, and we're sticking together and going through this."

"In some ways, we'll be partners in crime," Ullal quipped.

Ullal and Mazzola both came to Cisco via its 1993 acquisition ofCrescendo Communications Corp. Mazzola went on to lead Cisco's enterpriseline of business. Ullal, who now sits on the boards of Nishan Systems Inc., Atoga Systems, and Abeona Networks, ledCisco's LAN switching business.

Now Ullal and Mazzola have taken more prominent roles at Cisco, as thecompany obfuscates its weaknesses in the service provider market by blurringthe lines between where its enterprise business ends and where its serviceprovider business begins.

Today's announcement included other interesting changes in Cisco'sexecutive lineup. Former service provider boss Kevin Kennedy has left thecompany. As first reported in Light Reading, rumors that he wasplanning to leave have been circulating for some time (see Cisco's Kennedy Ready to Leave?).

Former CTO and chief strategy officer Michelangelo (no relation to theturtle) Volpi is now in an operational role under Mazzola (no relation to the salad oil), the company says.Volpi will head up Internet switching and services, the largest of theeleven new technology groups.

"That's a promotion, not a demotion. Chambers is applying [Volpi's]strengths to the largest and most important new group within Cisco," saidone VC, who requested anonymity.

In other moves, Charlie Giancarlo, who led Cisco's commercial line ofbusiness, will now lead four of Cisco's 11 technology groups. JamesRichardson, the enterprise line of business boss who took over after Mazzolaleft for some time off, will lead Cisco's marketing efforts.

"Chambers is picking his team. He's using the restructuring to keep somepeople and get rid of the dead wood like Kennedy. There are also some thathe'd probably like to keep, but are going anyway. Put Russo in that group,"says the anonymous VC. "Chambers is also telling Wall Street where he seesthe money coming from."

The eleven new groups formed in the re-structuring are: access,aggregation, Cisco IOS [router software] technologies division (ITD),Internet switching and services, Ethernet access, network managementservices, core routing, optical, storage, voice, and wireless.

Cisco says that its three lines of business were first formed toaccommodate three different kinds of customers that were building threedifferent kinds of networks. Out of the other side of its mouth, though,Cisco had always endorsed the idea that the Internet would be the dominantnetwork and IP the dominant protocol.

In the late 90s, Cisco embraced new service providers as a potentialsource of growth, since those networks were upgrading quickly to handlethe Internet boom. But despite the company's acquisitions, vendorfinancing, and aggressive pricing in the service provider market, Cisco hasyet to take significant market share from Nortel Networks Corp. (NYSE/Toronto: NT) or Lucent Technologies Inc. (NYSE: LU), the top twotelecommunications equipment vendors (see Lucent: They're the Tops! ).

Despite breaking down the division between its service provider businessand its enterprise business, Cisco maintains that it is not retreating fromthe optical networking market. "We're not de-emphasizing optical; we'reexpanding," says Russo.

As well as "serving the needs of itscustomers" the reorganization will also present Cisco with a way to streamline itscosts.Collapsing three business units into one operating group will cause some jobs to become redundant and unnecessary.Cisco hasn't announced any additional layoffs, yet, but hasn't ruled them out,either. Executives were cagey when questioned on the subject. "That's nottheintention. But we can never say never. Time will tell," said Jayshree Ullal,group VP at Cisco.

Cisco shares closed up 0.41 (2.49%) to 16.89 in trading today.

- Phil Harvey, Senior Editor, and Stephen Saunders, Founding Editor,Light Reading

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