Cisco Veteran Resigns to Head Up New Firm

FRAMINGHAM (08/09/2000) - Cisco Systems Inc. veteran Don Listwin, one time considered to be the heir apparent to John Chambers as Cisco CEO, is leaving the company to head up a new company formed from the $6.4 billion merger of Phone.com Inc. and Software.com Inc.

Listwin will become president and CEO of the merged company, which has not been named yet. The company will combine Phone.com's software for connecting wireless devices to the Internet, with Software.com's e-mail and IP unified messaging software.

Listwin had been on Software.com's board since 1997. Cisco has a minority stake in the company.

Listwin joined Cisco in 1990 as a marketing manager and rose up to become the No. 2 executive at the company, and one of only two Cisco executive vice presidents. He led Cisco's corporate marketing, service provider and consumer lines of business.

Those duties will now be assumed by Chambers, Senior Vice President Kevin Kennedy and Senior Vice President Charlie Giancarlo, respectively. Listwin's decision to leave Cisco was made rapidly over a matter of days, Chambers told Wall Street analysts in a conference call Tuesday.

"It's with mixed feelings I announce my departure from Cisco," Listwin said during the call. "This is a very difficult decision for me, but the opportunity to be CEO aligned with my longstanding career goals. Over the last five to six months, I've been wrestling with the decision to stay with Cisco or join one of our ecosystem partners. Going forward, my goal is to create an even stronger partnership between my new company and Cisco."

"Given the role [Listwin] has played at Cisco, it seems only appropriate to formally thank him for his many contributions," Chambers said.

Listwin was considered by many to be the most likely successor to Chambers, but recently Listwin was downplaying that likelihood.

He was quoted recently in Fortune as saying he didn't want the Cisco CEO job and the high-profile statesmanship that comes with it. Also, Chambers has indicated he will remain CEO of Cisco for the next few years and Listwin did not want to wait that long, according to published reports.

An aggressive and aggressively self-confident executive who does not like his strategies or tactics questioned by analysts or the media, Listwin is credited with devising and executing some of the plans that helped grow Cisco from a $69 million company in 1990 to the $19 billion behemoth it is today. Among his feathers are Cisco's hugely successful shift to the service provider market which doubled its bookings from fiscal 1999 to fiscal 2000; and the company's "ecosystem" strategy of establishing targeted partnerships to attack specific segments of the Internet and e-commerce opportunity.

But analysts say Listwin is not solely or directly responsible for some of the successful programs for which he's given credit. There have also been some bombs, like the CiscoPro effort to push high volumes of Cisco product through retail and direct mail channels, and the troublesome integration that followed the $4 billion StrataCom acquisition in 1996.

"Don's been an active participant in who to buy and when -- but Cisco's a big company, and I don't think it runs on individuals anymore, except for Chambers," says Frank Dzubeck, president of Communications Network Architects, a Washington, D.C., consultancy. "The rest of the individuals behind Chambers, no matter whether they think it or not, are all employees. Is Don Listwin's leaving going to have any effect on the company? The answer is no."

Nonetheless, Listwin is a strong salesman and customer-focused, Dzubeck says, two attributes that should be beneficial in his new role at the company formed from the Phone.com and Software.com merger.

"He's a bulldog," Dzubeck says. "So it's going to be interesting to see what happens."

Listwin's new company will provide a range of carrier-class software to wireless and wireline carriers, portals and Internet service providers. The software will be designed to enable the delivery of e-mail, voice mail, unified messaging, directory and wireless Internet access for IP-based networks.

The combined company expects to sell to more than 140 service providers worldwide. The combined customer base of Phone.com and Software.com currently includes AT&T Corp., Sprint PCS Group, Nextel Communications Inc., Verizon Corp., British Telecommunications PLC, Telecom Italia SpA, Excite@Home Inc., PSINet Inc., Telstra Corp., Time Warner Inc.'s Road Runner, Telefonica SA, Deutsche Telekom AG and BellSouth Corp.

Through June 30, the companies reported combined revenue of more than $146 million.

Alain Rossmann, chairman and CEO of Phone.com, will be executive vice president and chairman of the combined company. John MacFarlane, CEO of Software.com, will become an executive vice president of the combined company. Under the terms of the definitive merger agreement, shareholders of Phone.com and Software.com will each own approximately 50% of the combined company. Each Software.com shareholder will receive 1.6105 Phone.com shares for each of their Software.com shares.

The transaction is expected to close by calendar year-end 2000. The name of the combined company will be announced at that time.

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