Velio Communications Inc. founder Raju Chekuri has stepped down as CEO, but company officials deny that it signals major changes to come.

Velio, a developer of backplane interconnects and TDM switch fabrics, has been the subject of some "wild speculation" lately, says vice president of marketing Dean Grumlose. Part of the reason might be that Chekuri's bio was removed from Velio's Website rather unexpectedly last month.

Grumlose wouldn't give specifics on Chekuri's departure but said it was "a mutual decision between Raju and the board," based on the changing needs of the company. Chekuri remains on Velio's board.

Grumlose adds that the new CEO search is "just barely underway" with no timetable determined for finding a replacement. Management is running the show for now. "We're not suddenly directionless," he says.

One possible reason for Chekuri's departure is that Velio is changing its game plan. A source close to Broadcom Corp. (Nasdaq: BRCM) says Velio had pitched itself as an acquisition target for that company.

Grumlose wouldn't comment other than to say that occasional merger talks are a part of startup life. Velio is looking for money -- having most recently received $45 million two years ago (see Velio Grabs Another $45M) -- and potential investors include larger companies that sometimes suggest acquisition deals. "That's a normal thing for a private company," he says. (Broadcom officials didn't immediately return a call for comment.)

Velio isn't planning on getting acquired, but officials expect to hear other offers in the future and will keep an open mind about them, Grumlose says.

Still, the possibility of a sale would better explain Chekuri's departure.

"He was against selling the company, so maybe the board disagreed with him," one source says. "His vision has always been to build a big company. With the current environment and tight finances, it's hard to do."

One change Grumlose did confirm is the departure last fall of a handful of employees specializing in signal integrity. They've founded their own firm, BaySide Design Inc., located in Velio's hometown of Milpitas, Calif.

Velio won't reveal its headcount, which was pegged at 80 back in 2000. It's definitely below 100, Grumlose confirmed, but he declined to respond when asked if it's more than 20. The company still maintains multiple development offices in addition to the Milpitas headquarters: Chapel Hill, N.C.; Princeton, N.J.; Boston; and Bangalore, India.

Velio has raised $95 million in three rounds from Capital Research Group, Global Catalyst Partners, Harbour Vest Partners LLC, Institutional Venture Partners, Redpoint Ventures, and Sequoia Capital.

— Craig Matsumoto, Senior Editor, Light Reading