It appears to be an end of an era at Cisco Systems announced this morning that long time CEO, John Chambers will step down from his post on July 26, 2015. Chuck Robbins has been groomed to take over the CEO position once Chambers leaves. The news has not moved the stock much in premarket trading. Cisco Systems is up 4.7% year to date.
Chambers originally took CEO helm in January 1995
While John Chambers may not be a household name compared to other legends that thrived and survived the Dot Com Bubble, such as Steve Jobs of Apple and Jeff Bezos of Amazon, shareholders of Cisco Systems should be very thankful for Chambers’ contribution. From the period between January 6, 1995 and May 4, 2015, Cisco Systems went from trading under $2.00 a share to $29.13, a gain of 1391.25%. This certainly shows that losing a 20 year veteran at CEO can be daunting and lead to uncertainty as the new CEO takes time to feel out his new position. However, the best way to replace a 20 year veteran and replace with a near-20 year veteran. New CEO, Chuck Robbins entered the scene at Cisco back in 1997 as the VP of World Operations. Arriving just two years after Chambers took the CEO position, Robbins certainly has been a part of Cisco’s rise. John Chambers will remain with the company as a board member and chairman.
First quarter earnings support turnaround efforts at Cisco
During the first quarter, which ended on January 24th, Cisco saw earnings per share of $0.46 on revenue of $11.94 billion. Adjusted earnings per share for one time charges comes out to be $0.53 per share. Cisco has been working on its turnaround since the Great Recession. While the cut in costs resulted in many job cuts, the company is leaner and meaner and according to the earnings call, Chambers thinks “Cisco has never, ever been better positioned”. However, Cisco still struggles with decreasing demand by telecom and cable provides. Additionally, Cisco’s China sales declined 19% as tougher competition in the country has hurt the company.
Overall, Cisco is getting back on its feet and looks to get back to its glory days of the 1990s. The departure of John Chambers is certainly a blow for shareholders who have benefitted from his tenure at Cisco. However, Chuck Robbins has been with Cisco 18 years and he certainly knows the ropes and the standard operating procedure at Cisco, to minimize succession turbulence.