Cisco CEO John Chambers may be having his Steve Ballmer moment. The situations are analagous. Steve Ballmer, the Co-Founder and fomer CEO of Microsoft, stubbornly stuck around Microsoft long after everybody starting chattering about his departure. Then Microsoft shares started rising in anticipation of his departure.
Of course I famously wrote last year that I thought John Chambers was retiring in 2014. It was not announced. It was too early, I guess. Or was it? The shares have risen since then, and the market is still chattering about it. It's also still top of mind in Cisco's San Jose, Calif. headquartes, where the rank-and-file are tiring of a corporate strategy that involves round after round of layoffs.
Note that in the Microsoft's case, the stock started to rise before the announcement that Ballmer would leave. That continued through the naming of the new CEO. Mr. Market knows more than we do. What's happening at Cisco? Cisco shares have been mysteriously strong lately, rising to a recent 52-week high hear $28.
What's behind this strength? Certainly not the un-inspiring earnings calls. Maybe it's the market sensing that change is close. This is exactly what happened to Microsoft shares in the year leading up to Ballmer's departure.
Microsoft's shares started rising in anticipation of a CEO change and then accelerated when the news was out.
Cisco shares have been steadily rising since October.
The market may be anticipating a "New CEO" event, which would be bullish for shares on the perception of changes at Cisco. The company has $50B in cash and all sorts of opportunities to shake things up. There could be a restructuring in the cards. The market just wants a new story to tell for Cisco. As the networking giant attempts to morph into a software-driven company, it could be that more radical changes might be ahead: A major restructuring? A spin-off of a cloud business unit? Anything is possible.
Again, look at the Microsoft situtation. Microsoft shares have risen since Ballmer left and new CEO Satya Nadella set the company on a course set directly for cloud.
Will it finally happen with Cisco? I think it has to. There is absolutely no upside to Chambers staying any longer, especially now that the stock has pumped up to $28 from $18 in less than a year. He can go out with a strong stock.
People at Cisco might take this as an "attack," but it's not an attack at all. Chambers has been at Cisco for more than two decades, and he has created a technology giant that dominates the networking market. But eventually, every company must change leadership, and this is a natural transition point.
Chambers is taking his time. I'll try to predict it again, and eventually I'll be right. My prediciton that Chambers will finally leave in 2015 is part of some other "Un-Predictions" that I wrote for SDNCentral, which you can check out here.
Another prediction: Juniper's turmoil will continue. More on that next week.