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Less than two weeks after announcing disappointing financial results, Extreme Networks President and CEO Chuck Berger resigned. He was replaced by board Chairman Ed Meyercord who has been a company board member for five years.
Meyercord made several changes to the company’s leadership team and expanded CTO Eric Broockman’s role to executive vice president of engineering.
Meyercord also named Bob Gault executive vice president of worldwide sales, channel and services. Eileen Brooker was named executive vice president of global alliances and strategic accounts, and Norman Rice was appointed to the role of executive vice president of global marketing and corporate development.
“They will be instrumental in driving a customer-focused culture at Extreme Networks and will bring a clear vision of how to align our product development investments with customer needs,” Meyercord said in a statement.
Throughout the executive upheaval, Meyercord and other officials were quiet about what drove the need for the changes or about plans going forward. During a May 6 conference call with analysts and journalists about the company’s quarterly earnings, the CEO said several times that the industry would know more when he and other executives release details of a strategic plan within the next 30 days.
“This team is working closely with the rest of our [executive] staff and a small group inside of Extreme to implement an aggressive strategic plan,” Meyercord said, according to a transcript from Seeking Alpha. “It is our intention to quickly adopt a more focused product and go-to-market operating plan that builds on Extreme’s strength and competitive position in growth segments of our industry. As part of this process, Extreme has to operate more efficiently with tighter execution.”
Meyercord said the first three months “clearly … was not a good quarter for us.” The company missed its projected financials, and saw weakness in its higher education and venue businesses in the United States. Overseas, the company was feeling the impact of a stronger dollar, as well as local competition, plus pricing pressures in Asia from the likes of Cisco System and Huawei Technologies. The company saw revenue fall 16 percent year-over-year, to $119.6 million, and lost $23.5 million.
Extreme is in a market that not only includes such competitors as Cisco, Hewlett-Packard, Juniper Networks, Brocade and Avaya, but also is in a state of transition as network virtualization makes inroads and such trends as data analytics, social software, IT mobility, the Internet of things and the cloud put more demands on networks for performance and capacity.
Extreme Looks for Calm After Turbulent Times
Internally, Extreme has had to deal with instability in the executive ranks, and is still working to get Enterasys Networks solidly into the fold, Meyercord said. Meyercord is the Extreme’s third CEO in five years. Extreme bought Enterasys in 2013 for $180 million. In the conference call, Meyercord conveyed mixed feelings about the deal.
“If you look at it on paper, you’d say that wasn’t a very good deal,” he said. “There’s no doubt, there were some execution issues. And it was harder for the teams to put the companies together than anticipated.”
However, the CEO said there also were multiple benefits, including the acquisition of wireless networking and network analytics capabilities plus adding talented people to the staff and customers to the installed base.
Throughout the call, both Meyercord and Rice were careful not to divulge details about the strategic plan being worked out. However, they talked about some shifts the company will undergo, particularly in how it will have a more solutions-oriented approach in what it sells to customers. Extreme has strengths in such areas as campus networks, wired and wireless capabilities, network analytics and software-defined networking (SDN), he said.
“So it’s really a function of us getting our engineering resources into alignment with our go-to-market strategy with sales and marketing,” Meyercord said. “It’s a little bit different when I talked about the old model, where we would invest dollars in building a new box that is going to be faster and more efficient, etc., that we’re going to push onto the market. Instead what we’re finding is that the market today is more solutions-oriented. And that’s how we’re looking at combining all the elements, hardware and software into a combined solutions offering.”
Rice agreed.
“The data center business continues to be something that’s a strong foundation for our company,” he said. “Typically, we look to sell solutions to our customers that reach to our entire portfolio, whether it’s driven through the data center or it’s driven through other areas, such as the access layer.”