New Cisco CEO Earns Kudos From Analysts, Hints at Cost-cutting Improvements

NEW YORK ( TheStreet) -- Cisco's  (CSCO) new CEO is already earning high marks from analysts.

Chuck Robbins, who was named to replace longtime CEO John Chambers on Monday, will help the computer networking company "gain momentum in a tough market right now," said Tim Zimmerman, vice president of research at Gartner.

Robbins is the company's senior vice president of worldwide operations and has been with the San Jose, Calif.,-based IT firm for about 17 years. He will replace outgoing CEO John Chambers effective July 26. Robbins was also elected to the Board of Directors, effective May 1.

Robbins hinted that he would improve operational efficiency to control costs but said he would also honor the IT company's long-standing goals and forge ahead with a fresh competitive agenda.  

Chambers is stepping down after 20 years to pursue personal interests in a move he suggested more than a year ago. He will assume the role of executive chairman on July 26 and will continue to serve as the chairman of Cisco's board.

In an afternoon conference call, Robbins said that he expects Cisco to clarify its business and technology strategy in more detail over the coming years. 

"I believe the next wave -- digitization, which is enabled through the Internet of Everything -- will maybe 10 times bigger than anything we've seen in the past," Robbins said.  "We're well positioned, and our customers expect us to help them through this next wave."

Analysts like Brian J. White of Cantor Fitzgerald, which has a buy rating and a $33 price target on Cisco, expect the CEO transition to bode well for Cisco because of Robbins' record of success in making changes to the organization. Cisco has been struggling with sluggish sales in China

"During his time with Cisco, Mr. Robbins was a key force to drive the reinvention of Cisco's sales organization and was also a member of the team that has led Cisco's transformation over the last three years," White said in a press release.

Cisco was up about 0.45% in Monday's session, with shares at about $29.27 in a 5-week range of $22.43 to $30.31. The stock is up about 5% year-to-date and up 27.6% the past year.

Also Monday afternoon, Cisco reiterated its third-quarter guidance, saying the timing of the CEO transition was not connected to its earnings results, which are scheduled for May 13. The Street expects $0.53 per share in earnings on $12.07 billion in revenue, according to Thomson Reuters estimates.

"One of the areas that they have to work on is product strategy," Gartner's Zimmerman said in a phone interview. "We know they've been working on some innovations but in order to continue to deliver innovations for their partners and customers in some of the challenging markets that they're in, the key for them now is understanding their customer base and assisting them with migration strategies."

Robbins led the company's global sales and partner team that drives $47 billion in business for Cisco, according to a company statement. He has helped lead and execute many of the company's investments and strategy shifts, including building a partner program, now worth more than $40 billion in annual revenue.

He was also a key architect of the company's strategy for the commercial business segment, which grew 8% year-over-year last quarter, and is now 25% of Cisco's total business, Cisco said.

" Chuck is an execution machine," said out-going Chambers in the conference call. "He can take execution and strategy and get results. He doesn't mind disrupting and he builds great teams. He's led a huge amount of partner momentum."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

More from Opinion

Breaking: Bill Cosby Found Guilty on All Counts in Sexual Assault Retrial

Breaking: Bill Cosby Found Guilty on All Counts in Sexual Assault Retrial

Earnings Season Is Simply Out of Control Madness - How Are You Surviving?

Earnings Season Is Simply Out of Control Madness - How Are You Surviving?

Why Ether and Ripple -- But Not Bitcoin -- Prices Might Come Under Pressure Soon

Why Ether and Ripple -- But Not Bitcoin -- Prices Might Come Under Pressure Soon

Daily Chatter: Here's Where the Markets Stand After Tuesday's Beating

Daily Chatter: Here's Where the Markets Stand After Tuesday's Beating

3 New Investing Myths That Must Be Busted

3 New Investing Myths That Must Be Busted