Cisco Watch: Are the brains draining?
After Don Listwin left Cisco Systems (Nasdaq: CSCO) to become CEO of
the newly-merging Phone.com and Software.com, we have to wonder if an
executive exodus has begun at the giant networking company.
Compared to, say, the executive exodus at Microsoft over the past year or
so, the Cisco leavings are just a trickle -- in fact, the only truly high-profile
departures this year are those of Mr. Listwin and Judy Estrin. Ms. Estrin,
formerly Cisco's chief technology officer, left the company in April and is
now heading her own technology research/development firm, Packet
Design.
While the departures aren't yet a trend (everyone knows it takes three
similar events to make a trend), are the high-level bailouts a sign that there's
no end in sight to the reign of current CEO John Chambers? To get a take
on the idea, Cisco Watch turned to its esteemed panel of underground
Cisco-watchers, who were all granted anonymity in exchange for their
thoughts:
1.There is no true heir apparent to John Chambers.
Though it proved handy for reporters to call Mr. Listwin "Cisco's No.
2 executive" and the "heir apparent," in fact he was one of two
holding the executive VP title -- the other being Gary Daichendt,
EVP for worldwide operations. "Cisco's not like Sun, where Scott
McNealy has clearly identified Ed Zander as the No. 2 guy," our
informers noted.
2.Mr. Chambers, only 50, isn't leaving anytime soon, so anyone on
Cisco's executive team who wants to be a CEO should start looking.
"He [Chambers] keeps saying he's going to be around for five years,"
one informer said, guessing that Mr. Chambers's stay is somewhat
more open-ended. "It's not surprising to a lot of people that Don
[Listwin] left."
3.Successful companies like Cisco are happy hunting-grounds for
recruiters.
"Large companies with momentum are where [recruiters] look for
CEOs," one person said. "The trick with Cisco is to keep the bench
strength high. That's why it's better sometimes to not have a clear No.
2."
4.Who's next? Instead of asking our panel, we'll take a shot at guessing
ourselves, since this item is pure conjecture. Someone whose name is
probably on a lot of recruiters' speed-dials is Senior VP Pete Solvik,
the company's CIO. Mr. Solvik is already a board member of several
technology companies, including Asera, a Vinod Khosla-backed
Internet business services startup. Another candidate is Kevin
DeNuccio, senior VP in the all-important worldwide service provider
operations space. Mr. DeNuccio recently invested in and became a
board member of startup MyNetSales.com, signaling entrepreneurial
interest, at the very least. Our trend-spotters are standing by.
KEVIN WHO?
Muted by Mr. Listwin's job change was news of Redback Networks
(Nasdaq: RBAK)'s appointment of Cisco veteran Kevin Q. Smith as senior
vice president of operations. A statement from Redback so effusively
praises Mr. Smith's credentials that one would think he, too, was an heir
apparent to Mr. Chambers.
But, as one source at Cisco put it, "Kevin who?"
Well, Mr. Smith was "senior director of manufacturing and plant manager of
high-end and optical systems manufacturing at Cisco Systems," according to
the Redback statement. That makes him sound like an optical networking
veteran. But Redback didn't hire away one of Cisco's optical networking
veterans, because Cisco didn't have an optical strategy on paper until late
last year.
So what did he do? He led Cisco's operations and distribution. Or, as the
Redback statement notes: "he was responsible for shipping billions of dollars
in revenue output, including nearly 33 percent of the company's revenue
output in the last year."
The statement gives the impression that had Mr. Smith called in sick for a
week or so, Cisco's revenues would drop by two-thirds. That probably
wasn't the case. But Mr. Smith should be able to help Redback get a handle
on its outsourced manufacturing operations around the world.
With growth like Redback has seen lately, Mr. Smith was probably a wise
hire. But despite the hyperbole surrounding his arrival at Redback, we think
Cisco will live to see another day.
CARL AND THE COMPONENTS
The most recent Cisco earnings conference call prompted another question:
what the heck is up with Monterey's wavelength router, anyway?
Cisco wanted the product to be shipping during the fourth fiscal quarter of
2000, but it is now slated to move during the first fiscal quarter of 2001.
Cisco boss John Chambers blamed the delay on the industry-wide shortage
of optical components.
But just last week, Carl Russo, Cisco's group VP for optical networking,
said that the Monterey product had taken longer than expected because
Cisco changed the engineering deadlines to allow for better quality control.
In fact, Mr. Russo blamed himself for having informed customers of the
delay without telling anyone else.
The Monterey unit, based in Richardson, Texas, is also tangled with Alcatel
in a lawsuit. But Cisco officials have repeatedly said that legal matters
haven't interfered with their product plans.
Are we making a mountain out of a molehill? No. Cisco's optical group was
formed with a mountain of cash and, thus far, they've had a molehill of
results to show for it. Whether delays are caused by communication failure,
missing bits and pieces, or a little of both, there is tremendous pressure on
that group to come up with something that wows the market as much as the
Cerent product Cisco acquired at the same time.
For that reason we'll keep you informed on its developments and, if need
be, its delays.
Also, with apologies to Miami Herald columnist Dave Barry, we could not
help but observe while assessing this information that "Carl and the
Components" would be a great name for a rock band. (Of course, Cerent
-- the optical networking company Cisco bought to snare Mr. Russo,
among others -- already has a history of musical talent; for a sample, point
your browser to UBIK and click the "Creetonz Corner.")
If you have any ideas for what to call a Cisco-based bunch of rockers, let us
know at ciscowatch@redherring.com.
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