As a selection committee member for America's Best Leaders, Michael Useem - Professor of Management and Director of the Center for Leadership and Change Management at The Wharton School of the University of Pennsylvania (whom by the way has also personally presented programs and seminars on leadership and change to Cisco Systems), appears to of had a hand in choosing Cisco CEO John Chambers for the honor of being named one of:
According to an America's Best profile written by Useem regarding Chambers' leadership success:
When AIG, Citi, and General Motors went into tailspins after the financial bubble burst in 2008, they abruptly changed leadership. But Cisco did not, and now in his 14th year as CEO—twice the norm for large companies—Chambers has led one of the biggest comebacks of modern times.
The Useem profile also shows that the always modest Chambers has absolutely no shyness about sharing credit for Cisco's success with others:
Chambers has built a management team that can help him render swift and informed decisions. He is known for acquiring firms (some 10 per year during his first decade at the helm, most of them successful). Asked what accounted for his capacity to pick winners, he pointed to his chief financial officer and board chair. They provided, says Chambers, a fast and frank evaluation of high-risk purchases.
Finally, Useem concluded his profile with even more modesty shown by Chambers:
On mention of his selection as a Best Leader, he insisted it was really a recognition of his team. And he'd like to be remembered, he said, for how "we changed the way the world looks, lives, learns, and plays."
Don't be shy, what's your take, is John Chambers being too modest when he shares credit for Cisco's success with others?
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Gag me
Comeback from what ? Internet bubble burst 9 years ago. Sales have been declining. Morale is horrible. Acquisitions failing. Useem should give a class on ass-kissing at Wharton.
I'm surprised
I'm quite surprised that you would imply Professor Useem was biased in helping select John Chambers for the honor of being one of America's Best Leaders 2009.
Just because Professor Useem consults for Cisco, it most certainly doesn't mean that he's biased.
Guess I just can't imagine a professor at Wharton needing to kiss a CEO's butt in order to get consulting gigs!
Especially since our BradReese.Com cofounder and sale manager - Reggie Grant, earned his MBA in Corporate Finance at Wharton.
Sincerely,
Brad Reese on Cisco
Network World Cisco Subnet
BradReese.Com Cisco Refurbished
Who Are You Describing?
"Sales have been declining. Morale is horrible. Acquisitions failing." This describes virtually every vendor in this space.
Are you nuts ?
John Chambers hasn't delivered a penny to his shareholders in the last 9 years, in the meanwhile he has collected millions of dollars of shareholder money as bonus. Is this the qualification of a "Leader in Modern Times" ?
I probably am nuts
I probably am nuts, but let's face it, without John Chambers, Cisco would not be the cash bank that it is today.
In fact, when Chambers' board chair retired in November 2006 (I think his name was John Something too), the Cisco Board of Directors did not appoint a new CEO as had been the Cisco custom of the past!
Heck, Cisco doesn't even need its Board of Directors as they're obviously superfluous with John Chambers at the helm of Cisco.
John Chambers is a living legend and who knows, maybe someday Steve Jobs, Larry Ellison and Bill Gates will be able to "emulate" the vision, success and business savvy of Chambers!
Sincerely,
Brad Reese on Cisco
Network World Cisco Subnet
BradReese.Com Cisco Refurbished
Cisco’s "failed acquisitions".
I couldn’t agree more with this statement. I concur wholeheartedly with this statement, including other views expressed by the very first poster (a la no dividends to shareholders despite sitting on a pile of cash....), but I just want to focus on Cisco's utterly miserable M&A strategy for now.
A quick perusal of Cisco’s "acquisitive" strategy and techniques clearly shows how some of the biggest deals fell flat.
I have to be extremely careful with what I say here due to obvious non-disclosure and/or non-compete agreements in place. So I will chose my words carefully without actually naming names or getting into copious details, but I think many of you industry savvy folks can decipher as what I’m alluding to. Let’s take a look:
1. Cisco was a bidder in a "huge" ~$8B acquisition.
This year’s biggest tech acquisition was done by a "surprise" party beating out the other three $100B+ m-cap companies in a 4-way tie. Behind closed doors, Cisco did some preliminary due diligence and they did make bid proposals in acquiring this huge Silicon Valley hallmark of a company. Cisco was snubbed. So was the other two companies identified in securities filings as "Party A" and "Party B" (two long-time partners and now competitors of Cisco); Cisco was "Party C".
2. Cisco’s discussions with respect to acquiring a $16B virtualization company that fell apart earlier this year.
Cisco won’t confirm or deny this, but insiders know that Cisco was engaged in an intense discussion with this virtualization software company and its parent company that owns majority of its shares. After days and weeks of discussion, the possibility of deal fell apart.
3. Tandberg bid.
This is out in the public domain so I can say company name without any liability. I think we all here know that Tandberg shareholders snubbed Tandberg’s management while REJECTING Cisco’s deal, stating that Cisco’s price tag was "too low". It’s not clear whether Cisco will "sweeten the pot" or just walk away altogether from this deal.
4. Pure Digital.
Again, here I can say the name and the product because this is all public information. The Flip (dubbed by industry analysts as "The Flop") has yet to produce anything significant for Cisco. In the consumer space, not many people will care about HD quality video for "on the go" usage – or bother carrying a separate device – when smartphones like the Apple iPhone 3Gs and the iPods already have pocket video. Cisco says that they have plans to use Pure Digital’s technology to bring video to the handheld and to the home (much like Telepresence), but anyone with an iota of intelligence about the markets will know that given the advent of 4G / LTE that will support video over wireless, Cisco must be dreaming, soothing in their own sel-delusion or living in la-la-land.
These are just some of the big acquisitions that went belly up for Cisco. Chambers should fire that gasbag uncharismatic clown Ned Hooper and some of the BU heads and hire some real business savvy folks who know: 1. M&A deal negotiations; 2. The markets and verticals; 3. Forecasting on evolving technology.
Cisco’s M&A team was legendary, under the leadership of Barry Eaggers and Mike Volpi. Books were written about Cisco’s M&A machine. Now, it has become a laughing stock.
Best,
Cisco Cash vs. Cisco Stock
Hi Renegade,
Why is Cisco not using its stock to get these acquisitions done?
After all, Cisco's stock price is currently above its Weighted-Average Price per Share - $20.41 of its Stock Repurchase Program (Page 35).
However, when Cisco's stock was valued way below its Weighted-Average Price per Share of $20.41, it exchanged Cisco stock ($16.23 per share) instead of cash to acquire Pure Digital:
Is Cisco's true cost purchasing Pure Digital $747M?
Based on the closing price of Cisco's stock today, $23.70, and given that Cisco exchanged 36,352,433 of its shares to acquire Pure Digital, Pure Digital stockholders now own $861,552,662.00 worth of Cisco stock, that's $271.5 million in extra profit for Pure Digital's shareholders from the original value of the deal, $590 million.
Again, Cisco had tens of billions in cash, why did it exchange Cisco shares for Pure Digital that were then valued way below Cisco's cost in repurchasing those shares?
What am I missing here?
Sincerely,
Brad Reese on Cisco
Network World Cisco Subnet
BradReese.Com Cisco Refurbished
Failed Acquisitions?
You go to a car dealer and haggle a bit and then put your best offer on the table. The salesman says he can't go that low, so you walk away rather than go up to his price since it makes financial sense for you to continue driving your existing car while searching for a new one at the right price.
In the Renegade World, you are a failure because you did not come up to the asking price. How is this analogy not apt for the Sun and VMware scenarios you describe?
Oh yeah,... You're obsessed with the Flip; seek help. High bandwidth to mobile devices is years away via LTE. Not only are there issues with mobile devices themselves, but take a look at the issues associated with mobile backhaul from cell towers. Fiber connectivity to cell towers is minimal now and will take massive capital and several years to implement.
Hey Cheerleader!
I knew you'd offer a retort, Cheerleader. :-) Despite our opposing views, I have the the utmost level of respect for your opinions, viewpoints and posts. It's good that we can engage in a spirited discussion, our varied positions notwithstanding.
Just quickly:
1. From a philosophical and metaphorical standpoint your "car dealership" negotiation analogy would hold water. Real life, however, is day and night apart. Cisco has long touted a a virtulization company for a whole now, yet they were unable to foster a deal. Cisco own virtulization product is a, well, not a game changer by any means.
2. "Asking price" is something that doesn't come from thin air. In M&A discussion and negotiations it is most often reached by way of informed valuations. I'll agree with you that sometimes asking price is completely "unreasonable", but when you have 4 huge $100B m-cap bidders bidding, you play to win. Even if it means paying more than premium. It's buyer's and a seller's market.
3. I'm not going to mention company names or deals in specific, but I must say that I am rather impressed with how are able to decipher my wording. Well done, good sir.
4. C'mon dude. You and I beat this Flip issue to death, many many times. We can agree to disagree till the cows come home. If you can allude to the Flip - by itself - having any significant advantage (HD feature being an exception) over smartphones like the Apple iPhone, then I respectfully ask that you please state those. Cisco itself is now jumping on the 4G / LTE bandwagon, but with Managed Services leaders like Ericsson beating out Cisco in theor home turf of the US (a la wins at Verizon and AT&T), it says a lot.
And yes, dude, all this ties in to the topic here: one can't possibly believe that Chambers was/is oblivious to all this.
Best,
In any contract negotiation,
In any contract negotiation, you have to have a walk-away price and the resolve to walk away from the deal when that threshold is reached. If you buy (or sell) beyond that point, then it just isn't good business for you. Whether or not Cisco set the right walk-away price for these acquisitions that never were is something we'll likely never know, but somebody up their chain had the discipline to not pull the trigger and get into a bidding war that would have blown their financial models out of the water.
Providers like Verizon and AT&T will soon (2010-ish) make splashy announcements about LTE rollouts, but the mobile backhaul problem is not going away anytime soon. Until there is carrier ethernet over fiber to the cell towers, 85%+ of all cell sites will only have TDM circuits (T1 / T3) over copper for backhaul, which is inadequate for large numbers of people to concurrently have streaming video on their mobile devices (which have yet to solve problems with chipsets and battery life). The "LT" in LTE means "Long Term" for a reason.
Yes, I do enjoy this. I enjoy my jabs at Brad, too.
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