Wow! This looks like RB or Yahoo! 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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