By Scott Moritz Senior Writer 07/16/2002 01:36 PM EDT
The Cisco (CSCO:Nasdaq - news - commentary - research - analysis) shuffle continued Tuesday, further thinning the top ranks of the nation's leading maker of network gear.
Ten-year veteran William Nuti, once seen as a strong candidate to succeed loquacious CEO John Chambers, left Cisco to take the chief operating officer spot at Symbol Technologies (SBL:NYSE - news - commentary - research - analysis). In quitting a high-profile post at Cisco to take the No. 2 job at a quiet Long Island-based maker of bar code and wireless data gear, Nuti raised some eyebrows about the Chambers succession race and the fate of a struggling unit he headed.
But others saw the move as merely another acknowledgment that like its struggling peers, Cisco must slim down if it is to hold onto its slice of the shrinking telecommunications equipment pie. Mostly sitting out a minor but broad-based tech rally, Cisco was up 8 cents around midday at $14.52.
Shrinkage The 38-year-old Nuti had run several Cisco businesses in his ascent through the executive suites. Most recently, Nuti was the head of Cisco's U.S. operations and its struggling telecom gear division. That unit once was seen as Cisco's ticket to sustainable growth but now seems to offer little hope amid the ongoing collapse of the telecom business.
Nuti is the second top executive to flee Cisco's disappointing service provider unit in the past year. His predecessor, Kevin Kennedy, left in August when Cisco announced its 11-point reorganization.
Some observers speculate that the recent promotion of Charles Giancarlo to lead Cisco's switching efforts may have been a sign that Nuti at best would share heir apparent status should Chambers step down. That point is notable becauase Chambers's spotlight-seeking has given rise in some circles to an amusing debate over the prospective length of his tenure at Cisco. Some people, it seems, foresee a role in the Bush administration for Chambers, a development that would necessitate having a successor fully up to speed ahead of time.
But reality may be less intriguing. Nuti's defection is more likely part Cisco's efforts to shrink to more realistic sales levels coming off the late '90s Internet boom, says CIBC analyst Steve Kamman.
"They reduced the number of chairs in August, and it's probably going to take another six months before the music stops and we know the actual number of chairs available," says Kamman, who rates Cisco a buy. CIBC has no underwriting ties to Cisco.
Reading a statement regarding Nuti's departure, a Cisco spokeswoman said: "Bill contributed greatly to the Cisco organization. We wish him well in new position."
In a phone interview from his new office, Nuti downplayed the more trepidatious interpretations of his parting with Cisco, and said his move was more about the opportunities at Symbol and less about the challenges at Cisco.
"I'd like to think that I'm going to be a major loss for Cisco, but I think they'll do just fine without me," Nuti said.
The Crazy Train Kamman and others are also a bit concerned about what Nuti's departure means for Cisco's telecom business, which was once expected to help the data gear king continue its growth momentum into the telecommunications equipment market.
"Cisco was just starting to get to concentrate on the size it needed to service big customers," says Kamman. "So it's hard to tell if this reflects corporate politics or if the service provider business is going off the rails."
In any case, Nuti's move serves him well in at least one important way: It stands to drastically shorten his commute. As Lehman Brothers analyst Tim Luke wrote in a note to investors Tuesday, Nuti lived in New York throughout his Cisco tenure. Now, in another bleak development, some long-distance service provider and the airlines are going to miss out on all that traffic to San Jose.
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