Juniper CEO Resigns Amid Review by Directors

By Jeffrey Burt  |  Posted 2014-11-11 Print this article Print
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The leadership change comes after questions surrounding Shaygan Kheradpir's negotiations with an unnamed customer.

Juniper Networks, already under pressure to cut expenses and return more money to shareholders, is now undergoing its second leadership change in less than a year.

The networking vendor announced Nov. 10 that Shaygan Kheradpir, who took over as CEO in January, resigned suddenly following a review by its board of directors of his conduct during negotiations with an unnamed customer. The incident apparently convinced the director to question Kheradpir's leadership of the company.

"In the board's judgment, the conduct was inconsistent with our expectations," Scott Kriens, Juniper chairman and longtime CEO, said during a conference call Nov. 10 with analysts and journalists, according to the Wall Street Journal. "But it's really about our definition of leadership at Juniper."

Company officials in a statement said Kheradpir and directors "have different perspectives regarding these matters." Juniper directors reportedly decided Nov. 9 to make the leadership change.

Rami Rahim, a 17-year veteran of Juniper who had been executive vice president and general manager of development and innovation at the company, will now become CEO.

It has been a tumultuous year for Juniper, which competes with the likes of Cisco Systems and Hewlett-Packard in the rapidly changing networking space. The company earlier this year came under pressure from activist investor Elliott Management, with officials from the private equity firm praising Juniper's technologies but saying the vendor had underperformed. Elliott officials saw the leadership change from Kevin Johnson—who resigned in November 2013—to Kheradpir as an opportunity to push for changes inside the company.

Elliott—which also has been a vocal investor in such companies as EMC and Riverbed Technology—urged Juniper executives to make a number of moves, including reviewing its switch and router strategies, slashing operating expenses by $200 million, putting brakes on acquisitions and possibly shedding some businesses, such as its security unit. The investor also wanted the company to return more money to shareholders, including buying back $3.5 billion in stocks.

In February, Kheradpir—a former executive at Barclay's—unveiled a new business plan that he said focused on accelerating growth and increasing shareholder value. It included focusing on what he called "high-IQ networks" that are found in such environments as private and public clouds, streamlining business units, cutting $200 million in costs through such moves as reducing R&D spending and salaries, and returning $3 billion to investors.

Over the past 10 months, Juniper officials have announced such moves as cutting 6 percent of its workforce—about 560 jobs—and consolidating buildings. In June, the company sold its Junos Pulse mobile security business for $250 million to private equity firm Siris Capital. At the same time, the company has worked to bulk up its capabilities in such areas as software-defined networking (SDN) and network-functions virtualization (NFV), technologies that are rapidly reshaping the networking industry.

Now the job of steering the company into 2015 falls onto Rahim, who over the past 17 years has put his fingerprints on a range of Juniper products, including its flagship MX routing platform. Kriens in a statement said Rahim "is a talented leader who brings deep instincts about the networking industry, and enormous support from our employees and our customers."

For his part, Rahim said that "Juniper employees have truly risen to the challenge this year and that has enabled us to make incredible progress in 2014, including sharpening our focus on the highest-growth segments of the market, optimizing our organizational structure and improving cost management. And we've accomplished this while readying our next wave of great products."



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