Cisco's Chambers, hardly a kid anymore, plans to remain giant's key man

Updated May. 19, 2009 at 11:11 a.m.

Cisco's Chambers, hardly a kid anymore, plans to remain giant's key man

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RESEARCH TRIANGLE PARK, N.C. – With no designated successor waiting in the wings for its top executive roles, Cisco had best make sure its key-man coverage for John Chambers is up to date. The 59-year-old has no plans to retire any time soon.

One of the world’s highest profile tech executives told investors on Monday that he wants to remain as chairman and chief executive officer at the networking giant for at least three more years. After that? Well, don’t expect him to follow in the shoes of Arnold Schwarzenegger.

“I love what I do,” Chambers said at the Boston meeting when he was asked about retirement. “I intend to stay at Cisco for probably a minimum of three to five more years, assuming I can earn the shareholders' trust, our employees' trust, our customers' trust, and assuming my health holds up."

As for politics, Chambers seemed to rule out that career track. “God bless our politicians because it’s a thankless job,” he said, according to Bloomberg and Reuters. “I plan to retire here at Cisco.”

The Street seemed to like Chambers’ plans. Shares in Cisco (Nasdaq: CSCO) rose 80 cents, or 4.5 percent, to close at $18.72 Monday. They increased another 6 cents in afterhours trading but remain far from the 52-week high of more than $27.

Given his power as chair and CEO, Chambers is tremendously important to the company’s future. And despite recent changes in management structure toward what he has called a more collaborative environment, Chambers acknowledged at the conference that his decisions are crucial.

"My mistakes have always been when I've moved too slow," Chambers said, according to IDG News. "If you wait until all your team agrees, it's probably too late."

Chambers’ remarks sparked a flurry of comments on blog sites such as Barron’s about just how successful his guidance of Cisco has been. He took over as CEO in 1995 just as the Internet boom began and Cisco routers provided much of the essential infrastructure. Complainers want dividends and a better share price even in these tough economic times.

Last week during the most recent quarterly earnings report, Chambers noted that customers were “finally seeing something reasonably solid underneath their feet” and that perhaps the bottom had been reached in terms of low equipment demand.

Despite the global economic slump, Cisco reported a profit of $1.3 billion, which was $500 million less than in the same quarter a year earlier. And Cisco continues to push new products and services, including Monday’s announcement of a “smart grid” strategy for power suppliers.

But what happens to Cisco if something were to happen to Chambers? Who would succeed him has been the subject of speculation since December of 2007 when Charles Giancarlo, Cisco’s chief development officer, quit.

Rather than focus on a new No. 2, Chambers implemented changes in management structure with what he called a “Development Council.”

“Cisco's prioritization on collaboration and developing new business models is driving the company's organization, cultural, global and business approach,” he said at the time. “As we build Cisco into a next-generation company, we will transition from a company that is driven from command and control to one that is built on teamwork and collaboration. The Development Council is one example of how this new structure will drive collaboration to effectively address market opportunities, drive efficiency and quality, and foster innovation."

At Monday’s conference, Reuters reported that Chambers remains optimistic about Cisco’s future despite the continuing recession.

"We have a playbook that handles market downturns," he told the attendees. "Every time there's been one, in '93, '97, 2001, and 2003, we emerged out of the market with much higher market share, much larger percentage of the total industry's market cap that we were addressing, and movement into new market adjacencies. We are doing the same thing at this time."

The game plan included some job cuts at its 2,000-plus employee campus in RTP but nowhere near the layoffs Cisco made following the “dot com” bubble implosion in 2001-2002.

Among the cost cutting is a sharp reduction in travel as Chambers ordered use of Cisco’s own TelePresence services for meetings. That move saved Cisco $240 million alone, Chambers said.

How's that for a dividend?

Tags: Layoffs, Cisco

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