Chambers Says CISCO Systems Will Probably Split Roles for Successor

By Mani
Updated on

John Chambers, Chairman and Chief Executive Officer of the biggest maker of networking equipment Cisco Systems, Inc  (NASDAQ:CSCO) said his successor probably won’t immediately hold both roles.

Chambers Says CISCO Systems Will Probably Split Roles for Successor

In his television interview with Bloomberg Television’s “In The Loop” with Betty Liu, John Chambers outlined his plans to step down, the company’s succession plan and how the CEO and Chairman roles would be handled with his successor.

He indicated that it would be appropriate to split the positions when there is a new CEO and Cisco Systems, Inc. (NASDAQ:CSCO) would probably do that when his succession happens for a couple of years.

With the impending May 21 vote being faced by JPMorgan Chase & Co. (NYSE:JPM)’s Jamie Dimon on whether he should be allowed to hold both Chairman and CEO post, John Chambers indicated that Dimon is needed by J.P. Morgan even more during these tough times at the bank and felt that the bank should keep both the posts together.

John Chambers Longest Serving CEO

John Chambers has been credited for being one of the longest serving CEO’s in the technology industry. He has been CEO at CISCO since 1995.

In the meanwhile, Cisco Systems, Inc. (NASDAQ:CSCO) reported on Wednesday a surprise beat in revenue and earnings in fiscal third-quarter, pushing the company’s shares to gain over 8 percent in after-hours trading.

FBN Securities, an independent broker dealer, in its report assigned ‘outperform’ rating to Cisco Systems, Inc. (NASDAQ:CSCO) post the results and indicated a target price of $27.

Shebly Seyrafi, the analyst at FBN Securities feels Cisco Systems, Inc. (NASDAQ:CSCO) has started seeing good signs in the U.S. and other parts of the world. Commenting on CISCO’s performance, the analyst notices CISCO’s results are quite striking as most of its networking peers missed and provided below consensus guidance. Besides CISCO’s product GM improved to 62.1 percent from 60.9 percent in FQ2, even though its high margin switch revenue declined.

FBN is also encouraged at Cisco Systems, Inc. (NASDAQ:CSCO)’s product order growth trends, as its book-to-bill improved to 1.0 from less than 1.0 in the previous two quarters.

FBN Securities also observes that CISCO’s guidance of revenue growth for FQ4/July quarter at 4-7 percent is in line with the consensus estimates. However FBN feels CISCO has potential for higher growth.

The boutique institutional brokerage firm observes from Cisco Systems, Inc. (NASDAQ:CSCO)’s FQ3 results that the company underperformed consensus on switching but beat consensus in routing, service provider video, collaboration, and wireless.

Recent weak results from companies including  Juniper Networks, Inc. (NYSE:JNPR) and International Business Machines Corp. (NYSE:IBM) made investors worry. This prompted investors to presume that due to sluggish spending by customers like the U.S. government, CISCO might also post weaker results. On the contrary, Cisco Systems, Inc. (NASDAQ:CSCO) reported revenue growth of 5 percent in the total U.S. public sector while federal spending showed a decline of 3 percent during the quarter.

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