SAN FRANCISCO (08/09/2000) - Cisco Systems Inc. said Tuesday that the person widely assumed to be in line for the company's No. 2 slot, Executive VP Don Listwin, is leaving for the top job at a networking industry startup.
The news, which comes just as Cisco posted fourth-quarter earnings that beat estimates, took Wall Street by surprise. While Cisco, the data-networking market leader, has management ranks strong enough to absorb Listwin's departure, the exec was seen as the most likely successor to high-profile CEO John Chambers.
During Listwin's tenure at Cisco, he oversaw the company's most critical line of business, its sales-to-service providers. Already, Cisco dominates the corporate networking marketplace. Sales-to-telecom companies that are migrating from older phone-networking technologies to data-networking gear are key to Cisco's future growth.
Cisco executives plan on Wednesday to name the startup of which Listwin will become chief executive. The networking powerhouse did reveal that it holds a minority interest in the startup and that Cisco's senior VP, Kevin Kennedy, will occupy a seat on the startup's board.
A Cisco spokesperson said Wall Street's speculation about a successor to Chambers was premature. Chambers has committed to staying with the company for another five years and will choose a successor six to 12 months before leaving, the spokesperson said.
Listwin's duties are to be divided among a number of Cisco executives, including Chambers, until his replacement is found.
Cisco reported fourth-quarter net income of $796 million, or 11 cents a share, excluding one-time items, compared with $605 million, or 8 cents a share, for the same period a year ago. Excluding the one-time items, the company's earnings were 16 cents a share, or a penny ahead of Wall Street's expectations.
Sales for the quarter ended in July rose 61 percent to $5.72 billion, up from $3.56 billion last year. Analysts had expected sales of about $5.4 billion.
Cisco's shares rose in after-market trading after slipping on pre-earnings nervousness during the regular session.