Mulling CEO, Cisco promotes two

Bloomberg NewsOctober 5, 2012 

— 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 appointments, Cisco said Thursday.

“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.”

Cisco’s campus in Research Triangle Park houses 5,300 employees and contractors, making it the company’s second-largest site.

While the discussion over succession indicates a new openness to change at Cisco, it may be instrumental in winning back business lost to such competitors as Juniper Networks and Hewlett-Packard, and technology shifts being driven by smaller competitors, such as Arista Networks and Palo Alto Networks. 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 also are strong candidates, Chambers said in an interview.

“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 Sept. 26 as potential successors include Chuck Robbins, who also was promoted to head of worldwide sales, and Edzard Overbeek, senior vice president of global services.

Robbins lived in Greensboro and often worked from Cisco’s RTP campus from 1997 to 2002, when he held various sales leadership positions.

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 make him a likelier pick if Chambers stays longer than expected. Slack said Overbeek ranked highly for him as well.

Rivals of the San Jose, Calif.-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 eventually it could slow sales of Cisco products.

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

Some high-ranking Cisco executives recently left the company amid restructuring.

One of the latest was Ned Hooper, who organized some of its biggest acquisitions. On June 26, Cisco announced that Hooper was leaving to form an investment firm.

Another recent departure was Paul Mountford, who ran Cisco’s global sales to businesses.

Staff writer David Bracken contributed.

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