Data Sheet—Wednesday, August 26, 2015
Cisco has a new CEO, Chuck Robbins, who is moving remarkably quickly to put his stamp on the venerable company. It’s remarkable because Robbins, who is 49, recently succeeded a Silicon Valley legend, John Chambers, now executive chairman.
As Fortune’s Jonathan Vanian has noted, Robbins has made an impressive debut.He recently presided over a solid financial quarter, with modest sales and earnings improvements that compared favorably with declines at fellow industry behemoths. In an interview at Cisco’s San Jose, Calif., headquarters Tuesday, Robbins discussed his ambitions to make Cisco speedier in its decisionmaking, more focused on software to go with its industry-leading routers and switches, and increasingly responsive to investors and customers.
For many CEOs these are typically soothing words and little more. With Robbins, the words are convincing. A 17-year Cisco veteran and formerly head of worldwide sales, he projects confidence with some of the changes he’s making without being dismissive of his predecessor. He wants, for example, to continue to re-evaluate Cisco’s product portfolio, though he credits Chambers for the decision to divest Cisco’s cable set-top box business. Robbins is ending the operating committee approach Chambers used in favor of a more traditional executive leadership team. And he’s putting his stamp on that team. Already Robbins has recruited three outsiders for key strategy roles.
Robbins also is unabashedly attentive to Wall Street. Investors said they wanted less speechmaking and more time for dialogue in quarterly earnings calls, so he made both changes. He also is signaling that Cisco’s business model is in transition. Deferred revenue from software and subscription-based products was up 21% in the company’s most recent quarter. Investors love deferred-revenue models for their predictability.
It turns out it’s a good time for a new guy at Cisco as the company’s business is changing. Robbins notes that “connectivity”—that is, providing equipment that connects computers and other communications devices to the Internet—always has been Cisco’s strong suit. “Now connectivity isn’t good enough,” he says. Software that provides analytics, business insights, and security are key to the new package, especially when companies have so many information-technology assets outside their walls. “We’re moving from a data center to remote centers of data,” he says.
It’s a clever line that also has the benefit of succinctly describing the tech industry’s challenge and Cisco’s opportunity. Given that his predecessor was a master of straightforwardly explaining a complicated business, Chuck Robbins is off to a good start indeed.
Your usual curator Heather Clancy is away on vacation. Fortune reporter Robert Hackett here, subbing in. You can reach me on Twitter (@rhhackett) or email email@example.com. Feedback welcome.
Snapchat hires CFO. The ephemeral messaging app has tapped Drew Vollero, an executive from toy-maker Mattel, to lead its finance department. He will serve as VP of finance and acting chief finance officer, and one of his primary tasks will consist of readying the company for an eventual IPO. (Fortune)
VMware may take over EMC. The data storage and IT company's board of directors is reportedly considering a downstream merger. Adam Lashinsky, Fortune's assistant managing editor for tech and author of this newsletter's introductory essay, offered his thoughts on the possibility last week. (Recode, Fortune)
German court swipes Apple patent. The Federal Court of Justice in Karlsruhe has ruled that Apple's "swipe to unlock" feature isn't original. Besides, a Swedish company had already commercialized the tech pre-iPhone. (ZDNet)
Amazon Prime Now will start delivering booze. Beer, wine, and spirits can be shipped to members' doorsteps within one-to-two hours as part of the online retailer's new program. Amazon's speedy delivery service is also expanding to Seattle, where the company is headquartered. (Reuters)
Rentboy.com gets taken to court. Seven employees of the online male escort service have been charged with promoting prostitution. Although the company had a disclaimer on its website that users could not exchange money for sex, prosecutors allege that the site has essentially operated as an e-brothel. (New York Times)
Elon Musk buys $5 million in SolarCity stock. The Tesla Motors and SpaceX chief exec purchased a boatload of shares in the solar power company, of which he serves as chairman. The company's share price had lately drooped to a 22-month low. (Fortune)
Hortonworks acquires Onyra. The big data company built on Apache Hadoop has bought an early stage data startup. Hortonworks will release a platform for data-in-motion called Hortonworks DataFlow that's based on the company's NSA-derived "Apache NiFi" tech. (Venture Beat)
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Fortune contributor Jason Cipriani pits Samsung's latest handsets against each other.
"There’s a lot riding on Samsung’s latest smartphones, the Galaxy S6 Edge+ and Galaxy Note 5. Ever since the South Korean company hit a bit of a rough patch early this year it’s been looking for ways to improve its bottom line. Meanwhile, profits at the company have declined for seven straight quarters, forcing it to cut prices for its Galaxy S6 and S6 Edge.
Samsung is in dire need of a hit device to put the company back on a path towards rising profits, which is hopefully where the Note 5 and S6 Edge+ can help. For the past week I’ve tested both devices, using them non-stop to snap photos, capture videos, and do all the things you’d normally do on a smartphone. And you know what? These devices just might be what Samsung’s looking for." Read more on Fortune.com.
BITS AND BYTES
Black holes and information paradoxes. Stephen Hawking theorizes. (Washington Post)
Wingdings. The original emojis. (Vox)
Make like a tree. And grow metal. (Fortune)
Please don't touch the art. Oops... (The Guardian)
Pop engineering. Do you have the fever? (New York Times)
ALSO ON FORTUNE
ONE MORE THING
Cubans are coming online. And Wi-Fi hotspots are reshaping life in Havana. (Vice Motherboard)
"Market expectation was that Twitter, having created a completely differentiated platform, would accelerate innovation and introduce products and features that would justify a $60+ share price. Disappointingly, innovation for users has largely stagnated."
Investment banker Victor Basta, writing a research note that concludes an acquisition is all but inevitable for the real-time social network. As its share price drifts ever lower and its CEO search continues, Basta argues that the company could remain independent, "but to date it has squandered that opportunity." Google and Facebook are pegged as the likeliest buyers. (Fortune)