What the boy could not do well himself, he recruited someone else to accomplish. Specifically, he was not about to lose his childhood church-league basketball championship, but being slight and, while coordinated, not supremely athletic, he needed to attract great players to join his team.
That was something that the boy -- John Chambers, who would become chief executive of Cisco Systems -- had a real knack for. "His teams always won; he picked his people very well," said his father, also John, adding with a laugh: "Whether or not they were all Methodist, I was never sure."
The boy grew up, and those traits became the chief executive's trademarks: organization, execution, unabashed optimism -- and, pointedly, recruiting through acquisition. Cisco, the Internet behemoth, built an empire by buying technology from start-ups, not developing it internally. The style reflected that Chambers, unlike his best-known counterparts in Silicon Valley, was foremost a salesman, not a technologist.
Now this formula is being tested.
Cisco, whose fortunes rose and fell mercurially with the Internet bubble, is acquiring companies at a markedly slower pace. Industry analysts and some former Cisco executives wonder if it can buy its way to another pinnacle, find another means to soar and to develop and mine new markets, or whether its best days are behind it, with its legacy tied inexorably to the irrational exuberance of the boom. After all, its current businesses are on a pace to register about US$19 billion in revenue this fiscal year, a 13 percent decline.
In short, Cisco is in a midlife crisis. And it has fallen upon Chambers to field a new winning team. "This is not a company you want to bet against," said Chambers, 52, whose competitive drive can be masked by the staccato twang of Appalachia.
Then again, there is no way around it: those who placed their bets with him in 2000 did not just lose -- they were battered. In March 2000, Cisco's market value peaked at US$555 billion, briefly eclipsing Microsoft as the world's most valuable company. Cisco's market value has since dropped more than US$450 billion, costing its shareholders five times what Enron cost its investors.
The company, which Chambers said was caught by surprise when corporate technology spending went from 100km an hour to zero in the blink of an eye, wrote off US$2.2 billion in unused inventory last year. It declared its first quarterly loss ever.
It laid off 8,000 people -- 17 percent of its work force -- casualties in part of Chambers' zealously optimistic outlook for the markets for routers and Ethernet switches, Cisco's main products, which route data among and within companies.
Yet Cisco is far from undone. While technology spending has stagnated, the company remains the Shaquille O'Neal of its core markets, dominating the competition. Cisco held 81 percent of the US$7 billion market for routers last year and a 62 percent share of the US$11 billion market for switches, according to the Dell'Oro Group, a market research firm.
Routers direct data to a neighborhood while switches deliver it to a particular office.
Still, after the bust, Chambers has sought to move Cisco past triage and into long-term rebuilding by reorganizing the company, cutting costs and focusing on new markets, like Internet telephony, security and wireless communications.
RSS