John Chambers -- Cisco. In 1991, Chambers joined Cisco Systems as Senior Vice President of Worldwide Sales and Operations. Promoted to President and CEO in 1995, Chambers helped grow the firm to its present size. Before joining Cisco, he worked at Wang Laboratories from 1982 until 190, and prior to that, Chambers worked at IBM from 1976 to 1982. Under his leadership, Cisco and Chambers have earned all the requisite awards from Fortune 500, Forbes, CEO Magazine, Barron's, Business Week, and Time Magazine. Chambers has been visible in a variety of philanthropic arenas (Cisco Website, 2011).
Ben Verwaayen -- Alcatel-Lucent. Verwaayen is a Dutch national and an Officer of the Order of Orange-Nassau, an Honorary Knight of the British Empire (KBE), and a Chevalier de la Legion'd 'Honneur. He began working at Lucent in 1997 and worked his way up to Vice Chairman of the Management Board. Prior to joining Lucent, Ben Verwaayen was President and Managing Director of KPN in the Netherlands for nine years prior to joining Lucent. He was a member of the BT Board of Director before he became CEO in 2002. He left BT in 2008, having become Chairman of the Board's Operating Committee (Alcatel-Lucent Website, 2011).
Leo Apotheker -- Hewlett-Packard. Apotheker joined HP as President and CEO in 2010. Prior to joining HP, he was CEO of SAP and a member of the executive board from 2002. Apotheker was at SAP for 20 years and helped to build it into one of the leading providers of enterprise software. From 1992 until 1994, he was the founding President and COO of ECsoftBV, a large European venture capital firm. A German by birth, he is fluent in English, Dutch, French, German and Hebrew and was awarded the French Legion d'honneur in 2007 (Hewlett-Packard Website, 2011).
Future Corporate Initiatives
Cisco. Cisco has confounded investors with its seeming loss of focus on core business. The enterprise seems to be giving research and development its lead and video chatting is likely to move to center. Competitors HP, Alcatel-Lucent and Juniper are grabbing market share in their core markets of routers and switching. Cisco recently did a product launch of a router completely online -- by this, they seem to be signaling the market that they will be increasingly a presence on the Web (Yahoo Finance, 2011).
Alcatel-Lucent. Data center switching is on the verge of becoming a core business for Alcatel-Lucent. With its strong foundation in telecommunications, this is a natural extension that will provide businesses with cloud-like networking for virtual transactions (Yahoo Finance, 2011). Bell Labs is part of the Alcatel-Lucent enterprise and they have contributed their legacy in communications systems. Their explorations with the mobile gateway router indicate that they anticipate a strong part in the development of the 4G/LTE environment.
Hewlett-Packard. HP is expanding into emerging markets, and with their enterprise focused on serving businesses, they are likely to go target the business segments in developing countries. It is reasonable to expect expansion in countries with prospects for strong software and platform development. HP is likely to increasingly press into the cloud-computing arena -- shifting away from hardware to the Web will improve competitive positioning. In fact, Apotheker announced that HP will continue to develop its webOS platform with planned launches of TouchPad tablet and smartphones running on the connectivity platform. Given Apotheker's long experience with SAP, this is a logical move (Yahoo Finance, 2011).
Transitions and Corporate health
Cisco. The average tenure of 59 of Cisco's 61 executives is 11.5 years. At the height of the technology boom, Cisco's market cap was in excess of $500 billion; in 2009, it had dropped to about $108.03 billion (Bright Hub, 2011). Cisco is a mature company and seems to be resting on its laurels. The consistent reliability of well-tested gear brings some customers back who have tried equipment from younger firms. However, even HP is beating Cisco on price, giving 20% discounts to new customers who will rip out Cisco products and replace them with HP. Financials for July 31, 2011 are: Net Income $7,767,000,000 and Revenue $40,040,000,000.
Alcatel-Lucent. Many of the executives listed on the corporate Website show job changes but not the actual year they joined the firm. However, there is one exception in the C-Suite, listed as coming on board in 2005. Of the members identified by role (rather than by title because of European job titles are distinct from those in the U.S.) as executives in management team, four of the eight members were with Lucent or Alcatel prior to the merger and prior to 2002. This is a churn rate of about 50%, which might be considered fairly high were it not for the merger (Alcatel-Lucent Website, 2011).
Alcatel-Lucent was recently involved in the largest settlement in the history of the Foreign Corrupt Practices Act for bribes paid to officials in Costa Rica, Honduras, Malaysia, and Taiwan. Those liabilities on the balance sheet could have something to do with the $92 million penalty paid to the U.S. Justice Department and the $45 million paid to the SEC, and a $10 million paid to the Costa Rican government. The illegal arrangements occurred from the 1990s through 2006 (Yahoo Finance, 2011). Financials for December 31, 2011 are: Net Income (Loss) $(392,000) and Revenue $21,460,000,000 (Yahoo Finance, 2011). Gross profit for the same period was $7,747,000.
Hewlett-Packard. In the past decade, HP accomplished a flurry of mergers and acquisitions, including Agilent Technologies (technically a spin off), Compaq, EDS, 3 Com, Palm, and 3 PAR (San Jose Mercury News, 2010). The most recent C-Suite changes include Mark Hurd resigning in 2010 after a sexual-harassment charge (Business Week, 2010), Cathie Lesjak assuming an interim CEO role, and followed by the appointment of Leo Apotheker as CEO. Naturally, the most noteworthy CEO change involved Carly Fiorina, who headed the firm during the tech bust in the early 2000s. HP's market value plummeted, the company contracted and shed jobs, including Fiorina's, at the request of the Board in 2005 (The Statesman, 2007). Another leadership change occurred in 2006 when Patricia Dunn resigned after the pretexting debacle. Financials for July 31, 2011 are: Net Income $8,761,000,000 and Revenue $126,033,000,000.
New Product Lines
Cisco. In 2009, Cisco bought Flip video and began manufacturing video cameras, and then stopped production again in April of 2011. Cisco is engaged in VOIP and video conferencing, and also security surveillance. (MarketWire, 2011).
Alcatel-Lucent. Through two of its many acquisitions, Alcatel-Lucent moved into the Internet Protocol TV (IPTV) market and is also now in the business of providing telecommunication consulting through Thompson Advisory Group (Alcatel-Lucent Website, 2011).
Hewlett-Packard. From a position of being the largest manufacturer of computers, HP has followed more than led the technology disruptions in the sector. HP is producing stream-lined storage, simplified networks, and is providing access to cloud-computing (Bloomberg, 2011).
Summary: The Importance of Recognizing What You Don't Know
As financial analysts are fond of saying, "Past performance is not a guarantee of future earnings." In other words, backward mapping is a great indicator of history -- serving policy implementation analysts well -- but has limited utility for the future. Leadership is inarguably important to an understanding of corporate culture, but CEOs are subject to the vagaries of their boards, the exigencies of their enterprises, and, particularly in the technology sector, the disruption on the next horizon. Although the caveats that pepper the 10-K statements make corporate management teams seem like apologists, they do highlight important ideas. Markets are dynamic, people are fickle, and shareholders are myopic. Some wonderfully good people have been brought down by really awful circumstances, rarely of their own making. And some truly despotic personalities have prevailed when they shouldn't have.…