Cisco Promotes Executives as Chambers Lines Up Successors

Cisco Promotes Two Executives as Chambers Lines Up Succession
John Chambers, 63, has been Cisco Systems Inc.'s CEO since 1995, one of the longest tenures in the technology industry, and has indicated that he may retire in two to four years. Photographer: Victor J. Blue/Bloomberg

Cisco Systems Inc., the world’s biggest maker of computer-networking equipment, promoted Gary Moore and Robert Lloyd each to the role of president, lining up potential successors to Chief Executive Officer John Chambers.

Both are among 10 candidates Chambers had said were being considered as successors. Moore, 63, who joined Cisco in 2001, will remain chief operating officer. Lloyd, 56, hired by Cisco in 1994, will continue to oversee sales while adding engineering. Both had been executive vice presidents prior to the appointment, Cisco said in a statement yesterday.

“They’ve been the two leading candidates all along,” said John Slack, an analyst at Caris & Co. “The next CEO for Cisco will most definitely be internal, and this gives the market more of a direct line to follow for a succession plan for Chambers, which I think the market wants.”

While the discussion over succession indicates a new openness to change at Cisco, it may be instrumental to winning back business lost to such competitors as Juniper Networks Inc. and Hewlett-Packard Co. and technology shifts being driven by smaller competitors, such as Arista Networks Inc. and Palo Alto Networks Inc. Chambers initiated a management overhaul last year to stem profit-margin erosion.

Chambers, 63, has been Cisco’s CEO since 1995, one of the longest tenures in the technology industry, and has indicated that he may retire in two to four years.

While Moore and Lloyd are among the “first wave” of executives who will be considered for the top job, several others are also strong candidates, Chambers said in an interview yesterday.

Executive Moves

“It’s not a two-horse race at all, and it’s not a race,” Chambers said. “We win as a team. Whoever the leaders will be at Cisco have to be very strong team players.”

Other executives Chambers mentioned as potential successors during a Sept. 26 interview at Bloomberg’s headquarters in New York include Chuck Robbins, who yesterday was also promoted to head of worldwide sales, and Edzard Overbeek, senior vice president of global services.

Investors support Moore because he has tightened Cisco’s finances and has been a key figure in making the company more efficient, Slack said. While Moore could get the top job if Chambers retires soon, Lloyd’s age and his stewardship of the sales organization probably makes him a likelier pick if Chambers stays longer than expected. Slack said Overbeek ranked highly for him as well.

Restructuring Challenge

Rivals of the San Jose, California-based company are competing on price and pressuring profit margins, while weakened spending by corporations and government agencies have hurt sales. Software-defined networking, which wrings more performance out of existing networking equipment, also poses a threat, as it could eventually slow sales of Cisco products.

The pressures have led to layoffs and other restructuring moves. In July, Cisco announced plans to eliminate 1,300 jobs, or 2 percent of its workforce, bringing the total number of jobs Chambers has cut over the past year to 7,800. Chambers has also reduced prices and eliminated a council-based management structure that slowed decision-making.

Some high-ranking Cisco executives have recently left the company amid the restructuring. One of the latest was Ned Hooper, who organized some of its biggest acquisitions. On June 26 Cisco announced that he was leaving to form an investment firm. Another recent departure was Paul Mountford, who ran Cisco’s global sales to businesses.

Cisco gained 1 percent to $19.08 at 10:02 a.m. in New York. Through yesterday, the stock had climbed 4.5 percent this year.

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