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Who Else Is Exiting Cisco?

11:25 AM -- Cisco Systems Inc. (Nasdaq: CSCO) started handing out layoffs this week -- they're probably done by now, in fact -- and I can't help thinking that the list will include at least one more executive we've heard of.

With cuts pledged to sweep the company and cover 15 percent of the top ranks, it seems likely that one or more big names tied to telecom or the cloud will be leaving. (See Cisco Simplifies; Cuts 6,500 Jobs and Did Cisco Cut Deep Enough?)

One has already bowed out, and that's Enrique Rodriguez, who had been running Videoscape. It was a high-profile assignment that was the centerpiece of Cisco's CES presence in January, and now it's in the hands of Marthin de Beer, who runs Cisco's Emerging Business group. (See Cisco's Videoscape Leader Resigns.)

But I have a feeling someone else might go. I wouldn't be surprised if it was Ned Hooper, the chief strategy officer.

It's hard not to notice that the two things Hooper has recently been in charge of -- consumer products and strategy -- are two of the most highly criticized aspects of Cisco in the months leading up to the restructuring. Some analysts put it less kindly, especially the consumer part.

As far as we know, Hooper still has a role on the consumer side, but it seems to be a diminished one. With the exit of Jonathan Kaplan -- former CEO of Pure Digital (the Flip company) and Cisco's former senior vice president of consumer products -- Hooper has been sharing chairmanship of Cisco's consumer council with de Beer.

For a while, it looked as if Hooper was being groomed for big things at Cisco, and that might still be true. But it's de Beer who's taken the spotlight more often recently. At the very least, the guy who we once thought was being groomed as a possible CEO successor might be getting pushed to the margins. (See Hooper's Ascent Continues at Cisco.)

— Craig Matsumoto, West Coast Editor, Light Reading

quicktime 12/5/2012 | 4:56:40 PM
re: Who Else Is Exiting Cisco?

Does it mean something fishy was happening inside Juniper?


Or else,  it does not make sense for high executives, who benefit


from the growth, to jump out of the ship.

bollocks187 12/5/2012 | 4:56:40 PM
re: Who Else Is Exiting Cisco?

CISCO obviously bought them off with huge sign-on bonus and incentives. Th ffort is to clalry cripple hurt Junipr.


 As a customer tho I would be somewhat distrurbed if on day your selling Juniper and the next week you are selling CISCO as a replacement - lol. Never trust a salesperson as they are only as good as their last sale.


 


 

bollocks187 12/5/2012 | 4:56:41 PM
re: Who Else Is Exiting Cisco?

Craig,


 


I to do not understand/apprciate  the valu of FLIP and why on earth CISCO is invovld in such device.


 

bollocks187 12/5/2012 | 4:56:41 PM
re: Who Else Is Exiting Cisco?

Well of course you MUST IMHO blame JC lack of vision and leadership.


Or perhaps you are saying it is not his fault because the economy is in the tank/gutter ? Unlike the Public sector the Private sector should operate on performance.


Cisco with JC at the helm has had ample time and opportunity to break out and perform.


Once again I say it is time the market and share holders to start firing CEO's that exhibit a mindset of  "freedom from responsibility/accountability".

desiEngineer 12/5/2012 | 4:56:43 PM
re: Who Else Is Exiting Cisco?

You don't blame the CEO for the depression in the public-sector - you blame them for not having the vision to deal with that problem.  Are you saying cisco is a one-trick pony?  Doesn't have the right people to lead them into new markets?  Cannot figure out a foray into the camera business (or other consumer devices) hasn't been working long before the analysts?  Isn't capable enough to make the tough choices?  So, what do you fault JC for?  The only reason it won't happen is: who could/would take over?


-desi

Pete Baldwin 12/5/2012 | 4:56:44 PM
re: Who Else Is Exiting Cisco?

Thanks for the post, upand2theright. That's pretty much what i was thinking -- in pondering which 'name' executives might not survive this reorg, I had to be drawn to the one whose major initiative stumbled badly.  Hooper seems like a sharp guy, but I hear some Cisco observers questioning what he's contributing.  I'm not saying he's the source of Cisco's problems; he's just a likely target.


As for the source of Cisco's problems ... I'm not as convinced as others Chambers needs to go. Sorry. I liked his adjacencies strategy, although I agree Cisco went a little too far with it. (Still don't understand Flip, as I've said.)  And some of what's going wrong with Cisco -- like the depression in public-sector business -- can't really be blamed on him.


Shrinking margins: Now, that's a problem. It's also inevitable IMHO. You could argue Chambers isn't the guy to lead Cisco into the lower-margin era (or to find new areas that could bring up margins).  I'm not ready to say that yet, but hey, I could be proven totally wrong in a year or so.

upand2theright 12/5/2012 | 4:56:48 PM
re: Who Else Is Exiting Cisco? Ned Hooper, the Darden MBA, is talented guy. But the consumer lob miss puts him in the penalty box. Craig, I am surprised you are not jumping in here.
gotman 12/5/2012 | 4:56:49 PM
re: Who Else Is Exiting Cisco?

We love slagging crisco, but top down everyone knowns they can just eat everyones lunch and when they have cleaned up their shop, there is no better place to be and grow, apart from other personal financial benefits they would be the reasons. I wonder if they joined as a group, and IF it was SVP Dave who recently also joined Cisco from Jnpr behind it? Poaching engineers is one thing, and probably an easy thing to do, but to line up 7 seniors and move them requires some class, specially when Cisco has enough on its plate, very succesful ambush. All their competitors should be worried.

^Eagle^ 12/5/2012 | 4:56:50 PM
re: Who Else Is Exiting Cisco?

Any Ideas why those execs walked to Cisco?


Or was it simply that Cisco pulled a political trick and simply bought them off?


And finally, any bets on how long it takes Juniper to sue either those executives or Cisco or both?  Gotta be some kind of legal "non compete" in the high level executives employment contracts.... 


And gotta be a lot of risk of those execs knowing too much about Juniper's internal cost of good, juniper customer confidentiality, and other Juniper proprietary information.  


should be interesting.


On the counter flow, several key Cisco optical leaders left Cisco in the last year or so and joined Juniper.  and several from one of Cisco's key high speed optical module suppler (Opnext nee Stratalight) also jumped and went to Juniper.


of course those were not as high level staff as the sales execs that went to Cisco.


sailboat

Pete Baldwin 12/5/2012 | 4:56:50 PM
re: Who Else Is Exiting Cisco?

It's 6 sales folks including 2 execs:


http://www.lightreading.com/document.asp?doc_id=210890

quicktime 12/5/2012 | 4:56:52 PM
re: Who Else Is Exiting Cisco?

Apple will replace Cisco in Dow Jones?


Cisco feels chilly, we see Juniper, Broadcade diving.


That is the barometer of the economic.


APPLE is still in its history high. Does this


refect today's US economic?

gotman 12/5/2012 | 4:56:52 PM
re: Who Else Is Exiting Cisco?

What's with the rumor on the street that no less than 6-8 Juniper execs have just joined Cisco? What the hell? can someone confirm? Whats going on at Juniper?

akvasu 12/5/2012 | 4:56:53 PM
re: Who Else Is Exiting Cisco?

How much would you price Cisco's Overpriced routers at ?  All companies worth their salt price at similar ranges... if you had secret government funding and acess to Source Code and Hardware Design from other firms AND didn't give 2 pence to thoughts of quality then products would be priced lower......

CapitalC 12/5/2012 | 4:56:54 PM
re: Who Else Is Exiting Cisco?

I can't see how institutional investors will change the board and push Chambers out.


Cisco is the epitome of "widely held". Since it's been added to the Dow 30, it's also a must-hold for every large-cap index fund. And every NASDAQ fund, tech fund, S&P 500 fund, etc.


Perhaps Apple will replace Cisco in the DJIA. Still, there are around 1,000 passive institutional investors and ETFs that will hold the stock because they have to, and will simply vote for John's slate of directors. And then there are all the employees, grandmas, and charitable trusts that will hold the stock come hell or high water. A hedge fund would have an exceedingly difficult time picking up even 10% of the shares from the few active investors.


The end game here is that Chambers will simply retire once he's liquidated his CSCO holdings. Fortunately he is exercising and selling as fast as he can.


Who John will choose to succeed him is anyone's guess but I wouldn't bet against the Darden MBA with good hair and bad business judgment.

upand2theright 12/5/2012 | 4:56:55 PM
re: Who Else Is Exiting Cisco?

On Wall Street, Cisco fatigue is Chambers fatigue. Whether he steps aside (e.g. Lew Platt) or gets pushed out by insitutional investors, that's the exit to watch.  I also believe his replacement will be an outsider (e.g. Ray Lane or Mark Hurd). 

rjmcmahon 12/5/2012 | 4:56:57 PM
re: Who Else Is Exiting Cisco?

Ok, if I gave you access to some of the most educated people in the world, tens of billions of dollars in cash, and tell you all of the significant problems of which the solving would add significant value to society and your response is "Hey, I'll send out a phony mea culpa and I'll cut $1B in expenses by firing staff!" I think I'd be doing shareholders a service by firing you instead.  But the CSCO board is stuffed with sock puppets and the CEO seems to be a narcacist so it's going to be a long time coming to fix the core of the problem.

bollocks187 12/5/2012 | 4:56:57 PM
re: Who Else Is Exiting Cisco?

It was Craig comments


. The real question that LR should be posting is perhaps its time for JOHN to move on..........versus to wuote Craig "im actually dont mind that" or "he strikes me as someone who gets a lot out of good debate


It is of course his opinion but clearly as to my post and opinion John is ample rewarded for both failure and success - while others under his command take the negative impacts. A real leader would take responsibility for their failure and get up and resign working with the board take the golden handshake and give someone else an opportunity.


 


We in the USA have become immune to poorly performing CEOs and let them and the BoD get away with robbery.



 









tommytelephone 12/5/2012 | 4:56:58 PM
re: Who Else Is Exiting Cisco?

Who would hand out the ice cream bars?


How many times have we seen Cisco make a big announcement about venturing into this business or that, with great fanfare.  They hold conferences with impressive speakers who are not free to talk about very much detail.  Sorry, that's NDA stuff. 


Then after a few years of great promises and customer investments they decide to end the venture.  They lay off employees and  promise clients that they will find a way to bridge the gap.  They find another company that agrees to pick up the pieces, and sell new systems, at a greater expense, to the years behind schedule client.  Ah but Cisco hangs on to continue to supply the most important component: The overpriced Cisco routers.


 

dellman 12/5/2012 | 4:57:00 PM
re: Who Else Is Exiting Cisco?

Just wondering if the senior executives from any of the acquisitions cisco made in last few years are still working in Cisco?

Pete Baldwin 12/5/2012 | 4:57:00 PM
re: Who Else Is Exiting Cisco?

seven -- Yep, that sums it up well (both paragraphs).


bollocks -- You're reading waaaay too much into my post.

paolo.franzoi 12/5/2012 | 4:57:00 PM
re: Who Else Is Exiting Cisco?

Ray,


I think bollocks was responding to Craig's forum post NOT the article directly.


I think the debate goes - Well, Chambers tried a bunch of stuff and failed.  Why should others pay for this?  versus Well, at least Chambers tried stuff.  His track record should buy him some good will in the mind of investors.


seven


 

digits 12/5/2012 | 4:57:01 PM
re: Who Else Is Exiting Cisco?

bollocks187


I think you are reading the article incorrectly. Craig isn't blaming Ned for Cisco's woes or saying that Chambers has done a good job - he has identified someone who might be next in the firing line as Chambers looks for execs to blame.


If Craig had written that Chambers was a great CEO being let down by his minions, then fair enough, you could call his analysis naive, but that's not what he wrote....  

bollocks187 12/5/2012 | 4:57:02 PM
re: Who Else Is Exiting Cisco?

CapitalC post is 100% correct.


 


LR analysis give me a break with your assement. You put far too much stock in the CEO role at a company like CISCO.  CISCO has struggled and tanked - but its not the CEO's fault - no its the people below him. How naive are people to think that its not Chambers fault.


When Cisco is doing well John gets the BIGGEST reward. When CISCO is not doing so Good John gets to whack or blame other people and gets a LESS BIGGER Reward!


Get real man and don't insult people with naive analysis.


 


 

ericdong 12/5/2012 | 4:57:02 PM
re: Who Else Is Exiting Cisco?

Why not CTO Padmasree Warrior, if compnay lost its focus, it is CTO didn't do her job. 

Pete Baldwin 12/5/2012 | 4:57:03 PM
re: Who Else Is Exiting Cisco?

Ha!  Ok, fair enough; I should have mentioned there's a lot of chatter from people wanting Chambers to go.


I think it's pretty clear, though, that he's staying.  I actually don't mind that.  The adjacencies, in particular, come under a lot of criticism, but I think he was on the right track. Cisco needs to find its next-generation identity, something that comes after routers. So, while the money was flush, they went searching. To me, it makes sense.


"Corrupt loyalists" might be a bit harsh but you might be on the right track in general when it comes to the executive staff.  I talked with one person recently who noted that the execs who left (Giancarlo, Ullal, Volpi) were among those with the strongest opinions and personalities -- people who had no problem challenging Chambers.  Many of the remaining execs "grew up" under Chambers and might be more easily accepting of all his ideas.


It's just a theory.  Fwiw, I don't think Chambers prefers it that way; he strikes me as someone who gets a lot out of a good debate.

sam masud 12/5/2012 | 4:57:03 PM
re: Who Else Is Exiting Cisco?

Machiavellian is the right word to describe the Cisco culture.


 


So many years at the helm, and no clear successor to Chambers. Wow. Uncertainty does not benefit Cisco's customers, and I doubt if it's done any good for its employees--from senior management on down.


CapitalC 12/5/2012 | 4:57:03 PM
re: Who Else Is Exiting Cisco?

I was hoping you would say John Chambers.


After all, what is a chief executive supposed to do? Define the corporate strategy, sustain a strong executive team, nurture a productive corporate culture, and represent the company to the outside world. These are not responsibilities to be delegated to VPs or consultants.


Pursuing dozens of hopeless adjacencies unrelated to the core business while crippling long-standing sources of competitive advantage is the opposite of strategy. What remains of the executive team is a bench of corrupt loyalists. The culture has become Machiavellian and hostile to productive talent. Customers and investors are pissed off. And somehow, the friendly uncle has the audacity to blame it all on a "failure to execute". Engineers and management take the fall for the failures at the top.


Hiring McKinsey to come up with bold and stupid strategies, rewarding inept managers because they are old friends, and pumping the stock with tens of millions of dollars in advertising isn't the answer. How much longer will investors let the CEO feather his nest while running the company into the ground? I'd guess the company will shed another $30B in market cap before private equity takes it over.

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