SAN JOSE -- Cisco Systems CEO John Chambers may be Silicon Valley's ultimate survivor. Perched atop the massive computer networking company for 19 years, he has experienced the exhilarating high of seeing it briefly become the world's most valuable corporation, and the lows of its stock plunge and periodic layoffs of thousands of workers.
Now, in the final chapter of his career, he is determined to turn San Jose-based Cisco -- already Silicon Valley's fifth-biggest business by revenue -- into the world's top technology company.
That's a daunting task, especially given Cisco's financial slump -- reflected in Wednesday's earnings report, in which its sales dropped nearly 8 percent and its profit 55 percent from a year ago. But as one of the valley's longest-tenured CEOs -- who has kept Cisco growing by repeatedly reshaping it -- it's foolhardy to bet against him, many industry experts contend.
"Most companies become comets going across the sky and burning up," said Silicon Valley forecaster Paul Saffo. "I certainly can't think of anybody who has been as deft as Chambers in pursing this strategy of constantly fine tuning and adjusting."
The 64-year-old Chambers is used to adversity. A learning disability, dyslexia, left him humiliated as a child and so unsure of himself as an adult that he used to throw up before giving speeches. He's also been heavily criticized for Cisco's occasional stumbles -- especially after the dot-com debacle, when its shares sank more than 80 percent and it tumbled far off its perch as the world's most valuable company.
"Nobody likes to get beat up," he said in an interview. But he added, "You've got to be able to have the courage to make changes and go forward."
Not everyone likes where he's taken Cisco. Some investors grouse about its stock being mostly stuck under $30 for more than a decade, and others contend he hasn't changed the business enough. Adam Hartung, of consulting firm Spark Partners, argued in a 2012 Forbes Magazine column that Chambers has been slow to embrace new technologies and should be fired, adding in an interview with this newspaper that Chambers "made his company an also-ran."
But that appears to be a minority view. Since Chambers became CEO in 1995, Cisco's annual revenue has surged from $2.2 billion to nearly $49 billion and its profit from $457 million to $10 billion -- all while many other tech businesses went bust.
"You have to take a step back and think, 'What if he hadn't been there with all these changes, with competitors going bankrupt?' " said Cantor Fitzgerald analyst Brian White. " 'Where would Cisco be?' "
Although routers and switches, a kind of plumbing for computer systems, have long been Cisco's key businesses, Chambers has steadily expanded its products -- sometimes unsuccessfully -- to include security software, video conferencing gear and servers. Although experts say he has greatly strengthened Cisco by diversifying its sources of revenue, he also has put his corporation in direct competition with other tech powerhouses, including Hewlett-Packard.
But while many other tech companies get new CEOs every few years, with HP on its fifth since 1999, Chambers has demonstrated extraordinary survivability and exudes confidence. He maintains that Cisco will profit hugely from the billions of devices being steadily linked to the Internet, because its products are essential for those connections. And he says he's determined to turn it into the world's top tech company.
Chambers wouldn't specify how much sales or stock market value Cisco would need to grow to achieve that goal, emphasizing instead that he wants the company to be the place where businesses come for all their most important needs regarding data centers, networking and communications. While seemingly dull, those essential back-office technologies are at the heart of every modern global company and represent an extraordinarily lucrative opportunity for the businesses that can supply that gear.
It would be a remarkable achievement for anyone, but even more so for Chambers, considering what he overcame growing up in Charleston, W.Va.
It wasn't that he was poor. His father was a successful obstetrician, his mother a psychologist and the family owned a motel where Chambers worked as a teenager.
The problem was his dyslexia, a reading disorder. Some of his early teachers "were thinking I wouldn't even be able to go to college," he recalled. But Chambers persevered, earning a law degree from West Virginia University and a master's degree in business administration from Indiana University. He also conquered his fear of public speaking.
Still, he said his hands sweat when he thinks about his ailment, adding: "It's very humbling. Once you have people laugh at you, you never laugh at anybody else." At work, he prefers to communicate face to face or through voice mail, and his briefing documents are kept short.
Chambers joined Cisco in 1991 as a senior vice president of worldwide sales, and four years later became CEO.
Under his stewardship, Cisco's ascent was swift and breathtaking. By March 27, 2000, it briefly became the world's most valuable company, with the total market price of its outstanding shares hitting $586 billion. Then the dot.com crash hit, wiping out most of Cisco's paper worth within a year. Chambers cut 6,000 employees -- 14 percent of the workforce -- plus another 2,500 contract workers, and gave up his plans to expand into San Jose's Coyote Valley.
Since then, he has steadily fortified Cisco's finances, though not without missteps.
He's been faulted for experimenting with dozens of unwieldy advisory boards -- now greatly reduced in number -- and for temporarily venturing into consumer products. He was bashed over his $590 million acquisition in 2009 of Pure Digital Technologies for its Flip Video camcorder, a device largely undone by camera-equipped smartphones.
"Chambers pushed the company into some consumer areas they didn't have any business being in," said Jefferies & Co. analyst George Notter. "But to his credit he went back and got rid of all those," he added, calling Chambers "one of the best CEOs of the companies that I cover -- if not the best."
Two years after buying Pure Digital, Chambers closed the camera business and eliminated 550 jobs. A few months later, he announced 6,500 more cuts, followed by another 4,000 in August last year. And Cisco's recent slowing sales have rattled Wall Street.
Yet Cisco still elicits favorable reviews from many analysts, who often attribute their enthusiasm to Chambers.
"If you take a holistic view of his entire career, of just what he's built at the company, it's pretty impressive," said Baird Equity Research analyst Jayson Noland.
Cisco's board recently boosted Chambers' total annual pay nearly 80 percent, from $11.68 million to $21 million. Yet it's unclear how long he'll stay on the job. An avid sportsman, he's building a hunting lodge somewhere in Northern California and announced in 2012 that he might retire in two to four years.
"The timing has been John's decision," said Stanford President John Hennessy, a Cisco board member. "He's so dedicated to the company he wants to make sure whoever takes his place is ready."
That's only natural, having guided Cisco for so many years, Chambers said.
"It's like with your kids," he explained. "The kids being happy, successful and healthy is all you care about."
John T. chambers
Title: Chairman and CEO of Cisco Systems
Date of birth: Aug. 23, 1948
Birthplace: Cleveland, Ohio
Previous jobs: include senior vice president at Wang Laboratories and regional sales manager at IBM
Education: law degree from West Virginia University and masters in business administration from Indiana University
Residence: Palo Alto
Family: He and his wife, Constance Elaine Chambers, have a daughter, Lindsay, and a son, John.