Cisco gives CTO stronger role in exec shift

Tue Jun 26, 2012 6:04pm EDT

Cisco Systems executive Ned Hooper talks about video on the Internet during a news conference at at the 2010 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 6, 2010. REUTERS/Steve Marcus

Cisco Systems executive Ned Hooper talks about video on the Internet during a news conference at at the 2010 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 6, 2010.

Credit: Reuters/Steve Marcus

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(Reuters) - Cisco Systems Inc's chief technology officer Padmasree Warrior is taking on the additional job of chief strategy officer but unlike her predecessor, Ned Hooper, she is not considered a contender to be CEO.

Hooper, a 13-year Cisco veteran, oversaw the $3.4 billion deal for Norwegian video conferencing company Tandberg as well as the $5 billion acquisition of the pay-TV smartcard maker NDS, a deal which has not yet closed.

Hooper will be leaving to form an independent investment company, Cisco said on Tuesday.

He was considered a potential successor to John Chambers who had to announce job cuts and a major reorganization last year after several quarters of sub-par growth.

However, Cisco has since reported three straight solid quarters, squelching any speculation about Chief Executive John Chambers stepping down.

The polished and eloquent Warrior, who joined Cisco in 2007 after spending 23 years at Motorola, will remain CTO in addition to her new role.

"This allows her to focus on what she does well," Gartner analyst Andrew Butler said.

"Like (CEO) Chambers, Warrior is great on stage, she is well regarded within the company and is seen as a steady hand on the wheel," Butler said but added that she was not seen as a natural to succeed Chambers.

However, that may be a blessing.

A number of executives who have been touted as potential heirs to Chambers eventually gave up and left the company.

Take Don Listwin, the No. 2 at Cisco after Chambers, who in 2000 quit his job after a decade at Cisco to sign on as CEO with Phone.com, a wireless Internet equipment startup.

Analysts said at the time that Listwin was not prepared to wait it out for Chambers to leave.

William Nuti, a ten-year veteran and head of Cisco's U.S. business, left in 2002 to turn around Symbol Technologies and in 2005 succeeded Mark Hurd as CEO at NCR.

Mike Volpi, another senior executive and key driver of Cisco's acquisition strategy between 1994 and 2001, was seen as a rising star with CEO potential at Cisco but resigned in 2005.

That move seemed to clear the path for Charles Giancarlo to succeed Chambers but Giancarlo abruptly called it quits two years later and moved on to join private equity firm Silver Lake.

"Cisco needs an heir to the throne and you sense that this is a company that is looking to who that person could be," Gartner's Butler said.

"The good news is that there is no rush to find one," he added.

Chambers, who will turn 63 this August, has been at the helm of the network equipment maker since 1995.

Cisco also announced that Pankaj Patel will take over Cisco's engineering organization, a job he used to share with Warrior.

The networking equipment maker has been challenged by rivals such as Hewlett-Packard Co and Juniper Networks in recent quarters.

The company set a major reorganization last year aimed at making the business leaner and more efficient. That also included a 15 percent cut in its work force.

ISI group analyst Brian Marshall said the management changes was a continuation of that plan.

"In our view, (Cisco) is continuing to streamline the organization and consolidating responsibility for engineering, technology vision and strategy with two executives rather than three previously," Marshall said in a note.

"While we favor stability in the leadership ranks, we do not believe these changes were motivated by new execution, competitive challenges or strategic shifts," he added.

Cisco's shares closed down 0.7 percent at $16.82 on Tuesday.

(Reporting By Nicola Leske and Liana B. Baker; Editing by Bernard Orr)

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