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Optical/IP

Why Fiorina's Right for Cisco's Board

Short Take: Cisco appoints HP chairman and CEO Carly Fiorina to its board of directors.

My Outlook: Positive (sunny, almost).

On Jan. 9, Hewlett-Packard Co. (NYSE: HWP) CEO Carly Fiorina was elected to Cisco Systems Inc.'s (Nasdaq: CSCO) board of directors. But will bringing in the equivalent of a new third-base coach really help Team Cisco stay in front of the routing market and catch up in the optical space?

I think so and here’s why: Fiorina has a corporate vision that really meshes well with what Chambers & Co. are trying to project for Cisco right now. Since arriving at HP, she’s been trying, with mixed results, to transform the company from a products company to a services entity.

She wants HP to sell end-to-end solutions, a portfolio of services, customer consultation, etc., instead of boxes and widgets. It’s as if an issue of Fast Company magazine magically came to life and started running HP.

Cisco is also trying to wiggle out from under the burden of being a networking equipment company (a.k.a., "box builder"). It too wants to build end-to-end networks instead. “You don’t talk to business executives about optical versus other technologies; you talk about business solutions,” CEO John Chambers said in a speech yesterday.

In other words, by selling itself on its image and services, Cisco is less likely to get its tail kicked as it bids for more service provider business. Chambers's pitch is as follows: “We saved Enterprise Company X $100 million last quarter; we can do the same in the service provider market.”

It’s a good pitch to make, too, because, in my opinion, with only one fast-selling optical product — the ONS 15454 — in its portfolio, Cisco has been trying to hit a three-run homer with no one on base.

Sure, Fiorina is a bit under siege right now. Following HP's failed bid to buy PriceWaterhouse Coopers, she returned $625,000 of her $2.77 million compensation for fiscal year 2000 because HP missed its earnings goals (it's tough being Carly, eh?). And, yes, under her watch as president of Lucent’s Global Service Provider business in the late 90s, Fiorina helped Lucent Technologies Inc. (NYSE: LU) completely miss the chance to become a dominant player in optical networking.

Will she make the same mistakes again? We’ll see. In the meantime, who better to have on Cisco’s board than a battle-hardened big company CEO who’s not afraid to take some big chances?

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com
route66 12/4/2012 | 9:02:05 PM
re: Why Fiorina's Right for Cisco's Board Phil,
It's not that bad.
Besides, I was getting tired of looking at the other fellow.
Kaarthavarayan 12/4/2012 | 9:02:04 PM
re: Why Fiorina's Right for Cisco's Board Is it possible that John Chambers wants to groom Carly Fiorina as his heir apparent?

Any ideas folks?
shawn 12/4/2012 | 9:00:57 PM
re: Why Fiorina's Right for Cisco's Board looks like Cisco can't get anyone else interested in the company except Fiorina who had a dismal record at Lucent and HP. cisco having lost most of its routing expertise (people) to Juniper and Redback will now get bad advice to help it dig into a deeper hole..
ElGato 12/4/2012 | 9:00:40 PM
re: Why Fiorina's Right for Cisco's Board Agreed.....CF ahsn't done anything except occupy a prime seat when Lucent was spun off. The fact that Lucent and HP have both missed so badly speaks to her true skills.
Cisco Watcher 12/4/2012 | 9:00:37 PM
re: Why Fiorina's Right for Cisco's Board
> Is it possible that John Chambers wants to
> groom Carly Fiorina as his heir apparent?

Considering that she's already CEO of HP and doesn't have such a great track record, I think that Cisco would be better off grooming other stars within the company.

Personally, I think that Carl Russo would be the logical choice. With the optical side of the business growing the fastest for the foreseeable future, and Cisco positioning itself as a service provider vendor, I think that Carl has what it takes. Plus the guy exudes charisma and is equally at ease talking to investors, salesmen and engineers. Keep an eye on Carl, I think within the next few years he's going to do for Cisco what John has done for the past five years.
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