Cisco CEO Can He and Should He Survive?

Cisco Systems, Inc. CSCO (NASDAQ), the one-time darling of investors, finds itself in difficulty. The company designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology industry worldwide. Back in early April, the company’s well known CEO, John Chambers, was forced to admit the company had problems. According to a story in BizJournals, Chambers wrote a memo in early April to his employees in which he stated,

“We have disappointed our investors and we have confused our employees. Bottom line, we have lost some of the credibility that is foundational to Cisco’s success – and we must earn it back.”

Chambers went on to state,

… he will “address with surgical precision what we need to fix in our portfolio.”

The growing problems facing Cisco were made more problematic yesterday, when Microsoft announced the purchase of Skype. While most analysts have focused on the problems Microsoft’s acquisition could mean for Google and Apple, Cisco is also at severe disadvantage from this latest acquisition and is in a weaker position than the others to respond. While Microsoft has not shown great success in the past when it came to telecom acquisitions and the ultimate execution or integration of the acquisitions, the purchase of Skype was a brilliant move. If Microsoft can make the acquisition work, it will be beneficial in many ways for the firm and may even make its arrangement with Nokia a real winner going forward. Cisco on the other hand, only has more competition and a greater need for righting its ship.

Investors can expect tremendous pressure on Chambers going forward. His reign at Cisco seems more and more tentative as we move forward. He needs to make changes in the company and fast. Stay tuned.

Nokia Awakens from Big Sleep - Is it too late?

Nokia NOK1V (Finland), the world’s largest maker of mobile phones, has for sometime now been lagging the big players in smartphones. Nokia’s Management has seemed to have been asleep at the wheel while Apple, RIM, even Motorola and Google have leapfrogged the firm with regard to smartphones. Finally after much consternation by investors and analysts, the firm just announced the appointment of Anssi Vanjoki, a longtime executive at the firm, and the company’s current marketing chief to serve as the new smartphone chief. The announcement along with other management related changes, some of which have occurred over the last year, continue to put the firm in a spotlight they would much rather avoid.

Nokia needs to get a fire under its design and production capabilities to compete with the other big players eating the firm’s lunch. The latest changes are expected to go into effect by July 1. Keep a close eye on Mr. Vanjoki as he takes on a truly challenging task that is vital to Nokia’s continued success.

More:

Bloomberg updated 5/12

Apple's Steve Jobs Takes Medical Leave

Late this afternoon Apple announced that Steve Jobs, Apple’s CEO, has decided to take a medical leave until June to deal with his health related issues. In his place Tim Cook, Apple’s chief operating officer, will serve as the interim CEO.  Cook handled this position when Jobs underwent surgery years back for pancreatic cancer.  CNET reported that Apple released an email that Jobs wrote to Apple’s employees. The email stated:

Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.

In order to take myself out of the limelight and focus on my health, and to allow everyone at Apple to focus on delivering extraordinary products, I have decided to take a medical leave of absence until the end of June.

While the sudden announcement resulted in a late suspension in the trading of Apple’s stock after it fell nearly 10%, once this all settles down the market will hopefully recognize that the company is in good hands.  Cook was one of Job’s possible successors mentioned in an earlier blog and a story in Forbes back in the summer.

For more:

San Jose Mercury News

Electric Pig

Charlie Rose Interview of Michael Arrington, Techcrunch (video)

New York Times 

Seeking Alpha (1/15)

Steve Jobs - Maybe he is not indispensable to Apple

The recent news from Apple that Steve Jobs has issued a last minute cancellation of his keynote at the upcoming MacWorld event stirred new speculation on his health and what it might mean to Apple.  Rather than explore Jobs’ health status for which I have nothing new to bring to the issue, the real question remains what it might mean for Apple should he leave.  While many people have viewed the loss of Steve Jobs as Apple’s CEO as near cataclysmic, Justin Scheck and Neal Wingfeld of the Wall Street Journal wrote a piece that was far more circumspect over the consequences of Jobs leaving the company.  According to the story,

What if that situation does change? There is reason for optimism, based on the evolution of the team that develops Apple’s hardware, software and services, some people familiar with the company’s internal workings say. Some of them believe the group is now strong enough that, barring an exodus of top talent, the company could keep churning out innovative products without Mr. Jobs.  

Mr. Jobs did not respond to a request for comment…. 

In one possible sign of confidence in the management team, an unprecedented number of executives presented during the company’s press event to unveil its new MacBook lineup in October, though Mr. Jobs still dominated the event. 

… Mr. Crow contends that Mr. Jobs has now hired or elevated enough people whose product vision mirrors his that the company could continue to thrive. Mr. Ive is particularly in tune with Mr. Jobs’s thinking, he notes. Mr. Jobs’s sensibilities are also so deeply ingrained in lower-ranking designers and engineers that “a lot of people there will say ‘gee, what would Steve think about this,’ when Steve really isn’t thinking about it,” Mr. Crow says. 

Rick Devine, an executive recruiter in Silicon Valley with Devine Capital Partners, thinks Apple could continue to thrive in a post-Jobs world, predicting that the company will depend more on execution in the coming years than the kind of radical reshaping Mr. Jobs engineered over the past decade. Mr. Devine helped recruit Tim Cook, now Apple’s chief operating officer, to the company more than a decade ago.

 The authors make a good case for further success at Apple even without Jobs as long as key management talent remain.  To get the full story check out the entire article.

For more:

GigaOm

Recommended Reading - Why Apple Must Tell its Story, AdAge

Michael Bush of AdAge.com wrote a well thought out piece on the unusual nature of Apple and its famed CEO, Steve Jobs. While the news on Jobs' health appears far better lately than was thought even a week ago (read earlier blog), the company needs to develop a succession plan.  The question remains how can it do it in light of the current circumstances and the fact that Apple previously pushed Steve Jobs out as CEO once before.  The piece is a worthwhile read.

Recommended Reading - Apple-A-Day Talk, Investors Await Earnings and Jobs' Health

Back in June, Steve Jobs', Apple's star CEO, health appeared to become a story after he made a major presentation at the Apple Developers Conference.  At the time of the presentation he looked very gaunt.  Back in 2003, Jobs had a form of pancreatic cancer that had been successfully treated.  Since Jobs' presentation in June, negative rumors began spreading about his health.  Apple finally responded to the rumors by saying Jobs was healthy but at the time of the presentation had been taking antibiotics to treat a bug.  Earlier today the New York Post raised the issue again.  

I do not put any credence to the rumors but decide for yourself, read the Post story.

Recommended Reading - After Steve Jobs: Apple's Next CEO?

Fotune Magazine just did an article speculating on who might succeed Steve Jobs should he resign or retire. I point out the artice not becuase of the suggestions but rather because of the incredible bench of talent Apple appears to have waiting in the wings. While no one may be able to replace Jobs, the Forbes list of potential in-house successors is really impressive. Check it out.

Recommended Reading - Steve Jobs Bets the Apple Farm, Time

Josh Quittner of Time wrote a superb piece that laid out the risks and opportunities Apple's CEO, Steve Jobs has made with regard to his latest bet on the impending release (July 11) of Apple's 3G iPhone. According to Quittner, Apple's Jobs is

betting that, at $199 a pop, he'll sell so many iPhones that Apple will dominate the rapidly developing mobile Internet platform. Indeed, he believes that this new phone is so compelling—and so within the reach of the masses—that it's worth revisiting the deal he struck with AT&T for the 1.0 version, which reportedly gave Apple up to $12 to $18 per month on every iPhone that AT&T serviced. Instead, AT&T and other international carriers will now be providing a subsidy—supposedly about $200 a phone—to make the device affordable enough for the masses. The math works pretty well for AT&T...

But for Apple? Over the course of a two-year contract, the company could lose as much as $160 per user versus the old deal. That explains why Apple's stock dropped more than 2% on Monday.

Making Jobs' bet even more dangerous is the fact that we're about to see a whole raft of devices coming out that could give the iPhone 3G real competition. Google's open-source operating system for mobile phones, Android, is just about ready to be shown off in many handsets, from makers such as HTC, Motorola, Samsung and LG Electronics. You can bet that many of those phones will be way cheaper than $199.

I suggested the piece to point out once again the unusual nature of Steve Jobs as CEO and entreprenuer. We will just have to wait and see how the new iPhone does after its July 11 release and what exactly the competition might have up their sleeves.

If I were a betting man... you decide for yourself.

Also check out:

Deal Journal