Cisco CEO John Chambers may be planning to announce his retirement soon, and may leave the networking technology giant in the fall.
Cisco Systems Inc. (Nasdaq: CSCO) is also embarking on a reorganization that will result in 20,000 people changing jobs inside the company, according to Silicon Valley chatter. The reorganization would be intended to reduce duplicate work. Many employees are developing the same technology for different business units; the reorganization would streamline those redundancies.
The 65-year-old Cisco chief is set to announce his retirement in July and step down in September, at the end of the fiscal year, said a source. The Rayno Report was more cautious, simply saying Chambers may retire as early as September.
Chambers had said two years ago that he might step down in two to four years. (See John Chambers IDs Potential Successors.)
If Chambers does go now, he'd be leaving with the company in better shape than it was two years ago, when Cisco was struggling. Chambers would now be able to boast of refocusing the company and getting a turnaround under way. Cisco shut down its Flip camera unit in 2011, and sold off Linksys last year, getting it out of the consumer business and focusing on B2B market. Cisco set its sights on the Internet of Things (or Internet of Everything, as Cisco calls it) and articulated an SDN strategy, launching its Application Centric Infrastructure (ACI), and bringing spin-in Insieme in-house. (See Cisco Flips on Consumer Business, Cisco Unloads Linksys Unit, Cisco Integrates Virtual, Physical Networks, For Cisco, Is 'SDN' Code for 'Crush VMware?', Cisco's ACI Gets Physical With SDN, and Chambers Caught in 90s Deja Vu).
A company spokesman declined to comment on the report, labeling it a rumor. But he did say that Cisco would provide at least six months' lead time on Chambers' retirement, making a July announcement of September retirement unlikely.
Chambers would likely announce his retirement on an earnings call, says 451 Group analyst Christian Renaud. The next earnings call is August, raising some doubt about the veracity of the July declaration rumor.
Chambers would announce the retirement "one or two quarters in advance," Renaud says. "Unless it's health-related -- and that would put the stock in a tailspin."
Cisco stock traded at $25.02 at 7:26 pm EDT Tuesday, up 0.08% in after hours trading.
Just prior to the Cisco Live conference last month we started hearing rumors that Chambers planned to announce his retirement then. That obviously didn't happen.
When Chambers announced his possible retirement two years ago, he named several potential successors: Gary Moore, chief operating officer; Robert Lloyd, executive VP of worldwide operations; Chuck Robbins, senior VP of the Americas; and Edzard Overbeek, senior VP of global services. Chambers and Lloyd, now president of development and sales, met with reporters together during a Q&A session at Cisco Live.
Chambers said in 2012 that Moore would take over the company if Chambers left abruptly -- which Chambers called the "hit by the bus scenario."
But one Silicon Valley source said Cisco's directors may look outside the company for a successor, perhaps bringing in a senior executive from IBM Corp. (NYSE: IBM) or HP Inc. (NYSE: HPQ) to beef up Cisco's services strategy.
At Cisco Live, Chambers predicted an upcoming period of "brutal, brutal consolidation" in the technology industry, with most of today's industry leaders falling. He specifically picked on HP and IBM, though he said Cisco's own future is not assured. (See Cisco's Chambers Predicts 'Brutal' Tech Consolidation.)