This week is a pivotal one for router maker Procket Networks Inc. The company announced a huge customer -- its largest product deployment to date. But the news was somewhat overshadowed by the loss of two top executives, including Procket founder Tony Li.

Procket today revealed the details of big core routing deployment with Australia's Academic and Research Network (AARNet), where Procket was chosen over chief rivals Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR). On Monday, however, Light Reading sources say, the company told its employees that Chief Scientist Li has turned in his resignation.

Also at that Monday meeting, Procket brass announced that Vito Palermo, the company's chief operating officer, has left the company as well.

Procket spokesmen confirmed Palermo's departure, but declined to address Li's situation directly. "We don’t discuss personnel issues externally," says Cary Hayward, director of marketing for Procket.

"I can tell you that Vito has resigned his position here... and we're going to miss him," Hayward, then added, with apparently no intended irony.

Of course, it's no wonder Procket is hesitant to talk about Li's resignation now: He's still technically employed by the company and is working with AARNet right now to make sure their deployment goes smoothly.

It's that customer win -- and Li's work there -- that Procket's public relations team is keeping in front of the media as its management shakeup continues. "This is the largest award we've received to date," says Hayward.

"Despite strong bids from Cisco and Juniper, we've chosen relative newcomer Procket to power our network," George McLaughlin, AARNet's director for international developments told the tech publication Australian IT on Monday.

Meanwhile, evidence is piling up that Li is not long for Procket. "I will continue with my 'tour of duty' here in Australia, but will be leaving the company after that," Li wrote in a note to fellow Procket employees, according to one Light Reading source. "I do not like letting you down, but the alternative to doing so is far worse. I cannot go into it further, I just hope you will trust me when I say that there are some things that a man has to do if he wants to retain his basic ethics and morals."

Li could not be reached to elaborate on the note, its source, or his employment status.

Palermo left Procket because he had wanted to succeed Randall Kruep as Procket's CEO, according to a former Procket executive. Procket's board instead recruited Cisco VP Roland Acra for the top spot.

It's not clear whether Palermo's and Li's departures were at all connected. A call to Palermo at home was not returned.

What is clear is that there's no mistaking how influential Li is to Procket.

Procket was founded in 1999 as a network processor company created by William Lynch, lead architect for Sun Microsystems Inc.'s (Nasdaq: SUNW) UltraSparc 4 microprocessor, and invested in by the likes of Cisco.

Li, another Procket founder, came aboard to devise software to make the chips suitable for routers. Li provided the systems expertise chip companies crave, as he had worked on Juniper's M40 and Cisco's GSR 12000 core routers.

After Procket's board decided it should be a router company instead of a chip maker, the company faced loads of promising startups, including Charlotte's Web Networks, IronBridge Networks, and Pluris -- none of which are still around.

Procket's staying power always resided in its top-flight technology and technical talent, as well as its ability to constantly attract loads of funding. To date, Procket has raised more than $300 million, the most recent installment being a $30 million deal (see Procket Stuffing Its Pocket).

Procket lore surrounding Li always makes for a long day at the water cooler. He's been said to butt heads with Procket's previous CEOs and senior managers. He has also quit his past jobs after allegedly becoming dissatisfied, leaving millions of unvested stock options on the table at each place (see Procket CEO Resigns).

But there's no question Li put his stamp on Procket. Its first CEO was Sharad Mehrotra, who was replaced as CEO by Redback sales exec Randall Kruep in 2001. Kruep resigned last June, with Acra taking his place earlier this month (see Kruep Leaves Redback for Procket, Procket CEO Resigns, and Procket Gets Cisco Exec). Li had a hand in Kruep's undoing, as well as Acra's hiring, according to Light Reading sources close to Procket.

Now folks will question whether Procket is as viable a company if and when Tony Li acts on his resignation. Procket would argue it is, especially given today's customer announcement, an important one for Procket in its quest to be considered a serious contender for large carrier networks.

Others aren't so sure; Procket and Li are inextricably linked in their minds. "If this doesn't put the nail in the coffin, I'd be surprised," says Esmeralda Swartz, VP of marketing at Procket competitor Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7). "It's only one guy, but Tony Li sort of is Procket. The other folks don't have the same persona."

— Phil Harvey, News Editor, and Craig Matsumoto, Senior Editor, Light Reading