After 20 years, Chambers to step down as Cisco CEO
Veteran tech executive John Chambers plans to step down after more than 20 years as CEO of Cisco Systems Inc., a major supplier of the computer networking gear that makes the Internet work. Cisco said its board has selected company executive Chuck Robbins to succeed Chambers in July. Chambers, who was one of Silicon Valley’s longest-serving CEOS, will move to the role of Cisco’s executive board chairman. During his tenure, the company grew from $1.2 billion in annual revenue in 1995, the year he became CEO, to $48 billion in sales last year. The 65year-old Chambers has been a respected corporate leader in Silicon Valley and on Wall Street. Chambers praised Robbins and said he emerged from a 16-month selection process as the strongest candidate to lead Cisco in a new era. The 49-year-old Robbins, who has worked at Cisco for 17 years, most recently served as Cisco’s senior vice president of worldwide operations.
Airlines becoming more dependent on add-on fees
U.S. airlines are earning billions — and add-on fees on checked bags and reservation changes are continuing to play an increasing role. The Department of Transportation said Monday that airlines collected $3.5 billion in bag fees last year, a 5% increase over 2013, and $3 billion in reservation-change fees, a 6% hike. At Spirit Airlines, which touts low fares and adds lots of fees, only 63% of its revenue comes from fares. Southwest still lets customers check two bags or change a reservation for free; it gets 95% of revenue from the ticket price. Net income at the 27 airlines counted by the government fell to $7.5 billion last year from $12.2 billion in 2013. However, net income can include one-time gains or losses — a one-time tax gain of $8 billion at Delta Air Lines in 2013 accounted for the industry’s overall decline last year. On the basis of pre-tax operating figures, airlines’ profit rose to $14.6 billion last year from $11.3 billion the year before.
Comcast says Internet subscriptions surpass TV
Just before its $45 billion deal with Time Warner Cable collapsed over regulators’ fears about a giant cable company’s control over the Internet, Comcast was racking up more online customers. For the first time, the country’s largest cable provider, which also owns Nbcuniversal, now has more Internet subscribers than cable subscribers, Comcast executive Neil Smit said Monday. As of the end of March, the company had 22.4 million customers for each. The advent of streaming TV is reshaping the cable industry, which is slowly losing video subscribers while the likes of online streaming company Netflix add more. Meanwhile, costs are rising for the TV, movies and sports that cable companies transmit: Comcast’s programming expenses rose 7.8% last year, to $9.8 billion. Combining with Time Warner Cable might have helped Comcast gain leverage against media companies in negotiations over content costs. Selling Internet access, however, is highly profitable. SNL Kagan, a market research firm, estimates that cash flow margins for Internet were 60% for cable companies at the end of last year, while video margins were 17%.