Cisco CEO John Chambers will be replaced by a chief technology officer, a move that comes as the company is struggling with a $2.8 billion stock buyback program.
Mr. Chambers, who led the company through its first recession, will also step down.
The timing for the hire of Mr. Chao has not been disclosed.
Cisco stock closed at $53.85 on Tuesday, a gain of 14.4% over the previous close.
The company’s stock has risen as much as 25% in the past year, as investors see the company’s ability to turn around the cloud-based network and cloud-software business.
Cisco is also working on software for a new Internet of Things platform and is making investments in new hardware.
The Wall St. Journal reported in March that Mr. Schmidt would take over the role of chief technology executive in May, but he has not formally announced the hire.
In the interview with the WSJ, Mr. Chang said he is focused on the company as a whole and the opportunities that are emerging, including the cloud.
“I’m not a CEO, but I’m a technologist,” Mr. Chandler said.
Cisco’s stock, which was trading below $50 on Monday, has risen more than 100% in its last five months. “
Cisco is not going to go to the next level,” Mr Chang said.
Cisco’s stock, which was trading below $50 on Monday, has risen more than 100% in its last five months.
“In the next six months, Cisco is going to have to move to a new direction.
It has a lot of great products that are working well, but they’re not ready for a whole new level of success,” said Dan Ariely, head of research for digital transformation at the research firm Ovum.
“We think Cisco’s momentum will be better if it has a new leader,” Mr Arielely said.
Mr Chang is the third chief executive to leave Cisco since it launched its cloud-services business in 2006.
Mr Chao, 65, is a Cisco veteran who joined the company in 1985 and was instrumental in its successful transformation of its Internet of things business.
He left to take over as CEO in 2009.
Cisco has been in the news recently for its $2 billion buyback of the Cisco Networks business, which the company acquired in 2010.
The buyback included $5.6 billion for equipment and software, including $4.5 billion for Cisco’s hardware and software business.
Mr Chandler said Cisco has done a “very good job” in recovering from the buyback.
“They’re going to be very, very well positioned,” Mr Chandler told the WSJD.
Cisco shares have lost nearly 90% of their value since Mr. Huang took over in January.