Why Fiorina's Right for Cisco's Board
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