Cisco Chairman Chambers to Step Down, Ending an Era -- Update
September 18 2017 - 2:30PM
Dow Jones News
By Rachael King and Cara Lombardo
Cisco Systems Inc. on Monday said Executive Chairman John
Chambers, who led the network-equipment company for more than two
decades and through two U.S. recessions, won't stand for
re-election later this year.
Mr. Chambers has been chairman since 2006 and executive chairman
since July 2015, when he gave up the role of chief executive to
Chuck Robbins, a 17-year company veteran. Still, he remained a
presence on the executive floor at Cisco's San Jose, Calif.,
headquarters.
While at the helm, Mr. Chambers built Cisco into the networking
leader with a market value at one time exceeding $500 billion. In
recent years, the company has grappled with layoffs as it faced
increasing competition from upstart rivals such as Arista Networks
Inc. and Juniper Networks Inc.
Mr. Chambers, 68 years old, began discussing a transition with
Cisco's board the past few months, and notified members of his
decision in an email Wednesday. Cisco plans to appoint Mr. Robbins,
51, as chairman when Mr. Chambers's term expires at the annual
shareholders meeting on Dec. 11.
"It is time for Cisco to move on to its next generation of
leadership," Mr. Chambers said in his email to board members. "It
is also time for me to move on to the next chapter of my life, on
both a personal and business level."
Mr. Chambers joined Cisco in 1991, the year following the
company's initial public offering, as senior vice president of
world-wide sales and operations. The company grew quickly in the
ensuing decade, powered by the unfolding dot-com era, as it sold
the hardware that made it possible for companies to send data
quickly over the internet and through corporate networks.
By March 2000, Cisco became the world's most valuable company
with a market capitalization around $555 billion -- a title that
was short-lived as the company was hit hard when the dot-com bubble
burst.
Mr. Chambers managed through the turmoil, shedding 18% of
Cisco's staff in March 2001. He leaned on those lessons in the
years that followed, being among the first CEOs to warn of
impending economic problems in late 2007 and steering Cisco through
the 2008 recession.
During his years as CEO, Mr. Chambers delivered a 1,600% return
to shareholders, including dividends. Based mostly on shareholder
return, Harvard Business Review in 2015 named Mr. Chambers the
second-best performing CEO in the world out of 907 executives.
Mr. Chambers delivered that return in the face of a major shift
in Cisco's largest market, the business of selling network switches
that link computers on corporate networks.
While the market for switching hardware has risen about 16% to
$24.4 billion between 2010 and 2016, Cisco's annual sales in that
department remained relatively flat at about $13.9 billion.
By the time Mr. Chambers handed the role of CEO to Mr. Robbins
in 2015, Cisco had been through its fifth consecutive year of
layoffs. The Wall Street Journal reported last month that people
close to Mr. Chambers said he had been shaken by Cisco losing sales
to Arista, a startup founded by a former star executive and
friend.
Mr. Robbins has sought to move Cisco beyond legacy hardware into
software and services. The company bumped up
research-and-development spending by $400 million to $6.3 billion
after he took over as CEO, expanding the company's reach in
security, analytics and automation.
In June, Cisco revealed a new security service it says can
identify and stamp out malicious software cloaked by encryption on
computer networks. The company is counting on this new service to
help drive sales of its switches.
Neither Mr. Chambers nor Cisco shared details about his next
plans. Mr. Chambers has been deepening his involvement in emerging
technologies such as drones. Earlier this year he co-led a $15
million funding round in drone security startup Dedrone Inc. He
also invested last year in enterprise drone services startup
Airware and joined its board.
Write to Rachael King at rachael.king@wsj.com and Cara Lombardo
at cara.lombardo@wsj.com
(END) Dow Jones Newswires
September 18, 2017 14:15 ET (18:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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