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Apple iWatch, Square IPO: 10 Tech Predictions For 2014 (Update 1)



John Chambers Steps Down as Cisco's CEO


Cisco (CSCO) CEO John Chambers has had a rough 2013, but 2014 could be a whole lot worse.

Equity markets have soared in 2013, but Cisco has largely stayed out of the rally, only gaining 4.28% year-to-date, compared to a 23.26% gain in the S&P 500.

Cisco's first-quarter revenue last month was woefully short of expectations, as the company loses market share to competitors, and struggles in China. Its second-quarter guidance offered investors no solace, as the company expects to generate revenue between $10.89 billion and $11.13 billion, well below the expectations of $12.6 billion.

In an analyst meeting on Dec. 12, Cisco cut its forecast for revenue growth over the next three to five years, indicating growth between 3% and 6%. It had previously said revenue would grow between 5% and 7%, so clearly there's a lot of work to do for Chambers and his management team.

Chambers has led Cisco to become a networking and switching utility for the enterprise, but its largely been passed by companies such as F5 Networks (FFIV), Brocade Communications (BRCD) and others, who have eaten Cisco's lunch.

To be fair, the company is fighting back, having launched its own software defining network (SDN), and is pushing towards making products that are focused around the cloud and especially mobile. It's also heavily invested in the Internet of Things (IoT), whereby regular appliances, such as refrigerators, washing machines and dishwashers become connected to the Internet.

That doesn't mean that the pressure on Chambers, 64, isn't great to turn Cisco's ship around. If Chambers cannot right size Cisco's product portfolio, its operating expenses, and reestablish its presence in emerging markets, especially China, than perhaps it's time for Cisco's board to look for replacements.

Potential replacements include Rob Lloyd, Cisco's President of Development and Sales and Chuck Robbins, senior vice president of the Americas. If Cisco's board of directors really wanted to shake things up, they could look outside the company, potentially at Pivotal CEO Paul Mortiz or Brocade's Lloyd Carney.

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