Seeking a new challenge and the chance to govern a company on his own terms, Cisco Systems executive vice president Don Listwin will soon depart the high-flying Internet equipment company for the newly merged Phone.com and Software.com. In the process, Listwin, 41, will step out from behind the shadow of Cisco chief John Chambers and embark on a voyage to the largely uncharted and unproven waters of the wireless Internet.
Wall Street has applauded Listwin's move. Phone.com's stock climbed above $100 by midday trading today after closing in the high $70s Tuesday.
Coming after Cisco's best quarter in four years, Listwin's move might seem curious. But the executive, once thought to be a natural heir to the Cisco throne, has already reaped millions from his 10 years at the networking giant and offers another example of a movement by veterans of the technology industry toward nascent opportunities.
Former Microsoft executive Brad Silverberg left the software giant to create a new venture firm focused on wireless technology start-ups, taking with him a posse of fellow Microsoft veterans. Daniel Hesse, having lost the battle to run AT&T's wireless spinoff, took an even bigger gamble and joined a laser-based networking company earlier this year.
Phone.com is one of the original creators--along with Nokia, Motorola and Ericsson--of the WAP (Wireless Application Protocol) technology that underlies most Net access services on mobile phones. The company has managed to sign up 77 major telephone carriers as customers, even taking some away from giants Nokia and Ericsson. That includes most of the big carriers in the United States, such as Sprint, Verizon Communications and AT&T.
"That's a pretty strong endorsement of Phone.com," said Peter Friedland, a wireless analyst with WR Hambrecht. "I don't think that software is going to get ripped out soon."
The company faces mounting competition from handset manufacturers, which are stepping up their efforts in the software world, as well as from Microsoft. In addition, a small but vocal contingent in the wireless world has mounted a campaign against WAP, saying that it is not the best technology for accessing the Net over phones.
But with revenues that grow as its client carriers' customer bases grow, Phone.com is already in an enviable position. Friedland's firm estimates that wireless Internet use will grow from fewer than 1 million subscribers today to more than 10.5 million at the end of next year in the United States alone. Other analysts have predicted that more than a billion cell phones will be in use worldwide by 2004.
"There aren't many opportunities with no obvious boundaries," Alain Rossman, the founder of Phone.com, said in an interview yesterday. "This is one of those."
Asked whether his company could become the Microsoft of the telephone world, Rossman quickly disclaimed any desire to replicate the business practices that brought the scrutiny of the Justice Department. But, he says, "the scope of the opportunity is very similar."
Listwin brings to the new company not just the experience of a seasoned executive, but personal relationships with many of the world's top telephone executives--or more specifically, keys to the doors that Phone.com must continue to open to retain its market lead.
He also brings experience with managing acquisitions, a growth strategy that Phone.com has pursued during the past year. Listwin says that in his capacity as executive or board member of a handful of outside companies, he's played some role in 70 acquisitions during the past decade.
Since Listwin joined Cisco, he has climbed the ladder to become the second-in-command at one of the most highly valued companies in the world. But he'd gone as far as he could go, at least until Cisco's current CEO John Chambers stepped aside. There is no indication of that happening in the near term.
"Waiting five to 10 years to maybe be CEO was certainly a factor," Listwin said yesterday. "Chambers is 51 and full of energy."
But even if Cisco is still on a rocket-ride growth path, Listwin believes his new employers can be too.
"What attracted me about the merger of the two companies was the vision and promise of being able to build a new industry," he said. "I think this company could double its revenues every year for the next five years."
The Cisco veteran will take over the role of chief executive and president from Rossman, who has run Phone.com since its inception. Rossman will remain as chairman of the board and executive vice president and will focus on strategic planning, positioning the company for future twists and turns in the wireless landscape, he said.
This is not to say that the new Phone.com-Software.com company is locked into a perfect growth curve, however.
The company produces technology and software, but it is up to its customers--the telephone companies--to market the services and bring in new customers. To date, much hype has surrounded the mobile phone-based wireless Web, but relatively few subscribers have actually made it a part of their daily lives, analysts note.
"The danger for Phone.com is that they've got all these deals, but the deals have yet to be executed," said International Data Corp. analyst Iain Gillot. "They're now reliant on the carriers to execute in order to maintain their stock price."
Listwin will formally take the reins of the newly merged company at the end of this month.