Will the Tony Li rumors ever end? Apparently not. Word in Silicon Valley is that the world's most famous routing software engineer is winding down his day-to-day engineering role and looking for a quiet way to slip out the back door of closely watched startup Procket Networks Inc., even though Li was recently named to the board of directors at the company (see Li Named to Procket's Board).

But wait -- there's more! Two other reliable Silicon Valley sources say that Mark Showalter, vice president of marketing at Procket, is also leaving the company. Showalter, a former top executive and a founder at CoSine Communications Inc. (Nasdaq: COSN), joined Procket back in July 2001 (see Procket Bulks Up).

Spokespeople from Procket deny that either Li or Showalter is leaving. "Ah, the ever persistent rumors," says Suzanne Panoplos, spokeswoman for the company. "Mark and Tony are both still with the company."

Li also denies the rumors. "That rumor is patently false," he wrote in an email to Light Reading today, "I'm still exceedingly busy and have numerous responsibilities."

Whether or not the rumors are true, there's no doubt that fundamental changes are underway at Procket. In the last few months the company has shed four of its board members and added two new members, Li and Daniel J. Warmenhoven, CEO of Network Appliance Inc. (Nasdaq: NTAP). Two venture capitalists -- Atiq Raza of Raza Foundries and Irwin Federman of U.S. Venture Partners -- both have stepped down, along with Jorge del Calvo, a partner with the law firm Pillsbury Winthrop. In addition, Sharad Mehrotra, a founder and former chairman of the board, also stepped down from the board. Mehrotra would not comment on why he left the company. Despite his title of "chairman emeritus," Mehrotra says that he has no association with the company any longer.

In the case of Li, the logic accompanying the rumors does make sense. If Li were leaving, as has been rumored for some time (see Is Procket Heading Toward the Edge?), giving him a board seat prior to his departure would be an elegant way for the company to wind down the relationship, without losing a lot of credibility. It also provides convenient cover from a PR standpoint.

Some of Li's former co-workers say this is unlikely. "I have no visibility into this and I have no way to know myself," says Mehrotra. "But my understanding is that Tony is committed to the company."

But the recent high-level board changes, along with persistent mumblings among the Silicon Valley elite, have left many skeptical of Procket's party line.

"It's never a good sign when you see the board getting smaller and more insiders taking up seats," says an equities analyst who didn't want to be named. "VCs don't quit boards for fun. Generally, there is more to it."

The company's current list of board members includes

— Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com