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Turmoil at Juniper as CEO Quits

Ray Le Maistre
11/10/2014
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As if Juniper wasn't already under enough pressure and scrutiny, Shaygan Kheradpir, who has been in the hot seat for less than a year, has quit with immediate effect following a "review by the board of directors of his leadership and his conduct in connection with a particular negotiation with a customer."

Kheradpir's short reign on the Juniper Networks Inc. (NYSE: JNPR) throne was tumultuous, starting with a public attack by activist investors, followed by a strategy review, job cuts, executive defections and a capex crunch in the service provider sector:

Kheradpir, who joined from Barclays Bank, was due to give a presentation to media and analysts in London last week, but pulled out at the last minute, with the company citing "illness" as the reason.

Now, it seems, the real reason is that the newly ex-CEO was fighting with the board over his performance and also the way he had interacted with a particular customer: As the company's statement today noted, "The board and Kheradpir have different perspectives regarding these matters."

Juniper's stock had already lost 1.87% on Monday trading to close the day at $21.50 following news of AT&T Inc. (NYSE: T)'s intention to allocate less cash to its capex budget in 2015. (See AT&T's Mexican Capex Dance.)

Once the news of Kheradpir's resignation hit the wires, the stock lost a further 0.23% in after-hours trading to hit $21.45. That the reaction to Kheradpir's departure didn't make more of a dent in the stock suggests that Wall Street does not regard this move as majorly negative for the company.

His replacement is Rami Rahim, a Juniper employee of 17 years' standing, whose most recent role was executive vice president and general manager, Juniper Development and Innovation.

"Rami is the right chief executive officer to lead Juniper," stated chairman Scott Kriens in the company's official statement Monday. "He is a talented leader who brings deep instincts about the networking industry, and enormous support from our employees and our customers. Rami has succeeded at every challenge he's ever taken on at Juniper, and we couldn't be more excited about his ability to lead this company."

It now falls on Rahim to steady the Juniper ship and ensure it becomes a major player in SDN and NFV in 2015 while defending the router business that underpins the company's revenues and margins.

— Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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wanlord
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wanlord,
User Rank: Light Sabre
11/23/2014 | 8:47:41 PM
Re: Good luck, Rami Rahim
Article I saw was Verizon, where he worked for a long time, so probably berating one of his old collegues, and this time he couldn't get a way with it.
wanlord
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wanlord,
User Rank: Light Sabre
11/23/2014 | 8:46:30 PM
Re: Rahim
From stories I have heard, it's not a surpise. He was a loose cannon at VZ. 
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
11/13/2014 | 7:50:26 PM
Re: Rahim
Makes perfect sense to me.  Imagine the hit the stock could have taken if they fired the CEO without a replacement.
bosco_pcs
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bosco_pcs,
User Rank: Light Sabre
11/13/2014 | 2:33:11 PM
A lot of stuff going on here
Ray, I read about it on NYT yesterday. The unusual thing about Dr Kheradpir's departure is that he has to repay part of his sign-on bonus and even moving expenses. Usually, you pay to get rid of a CEO. So, one can draw one's conclusion.

If memory serves, Juniper began to unravel when it failed to please Wall Street by saying some customer has delayed some order. Evidently, Cicso got some market shares back from it. Even with showing any signs of weakness, the barbarians may show up at the gate. So...

About the share price, maybe it is because activist investors think the company is still in play. Picking a long term insider doesn't dispel such a possibility
R Clark
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R Clark,
User Rank: Blogger
11/11/2014 | 6:08:38 PM
Re: Rahim
Stocks usually get a bounce from a new CEO. It's pretty interesting that the board made the new appointment immediately. As if they'd already made their mind up to dump Kheradpir.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
11/11/2014 | 6:37:48 AM
Rahim
Re: "That the reaction to Kheradpir's departure didn't make more of a dent in the stock suggests that Wall Street does not regard this move as majorly negative for the company."

It could also be a vote of confidence in Rahim -- something that the comments here so far seem to echo.
Ray@LR
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Ray@LR,
User Rank: Blogger
11/11/2014 | 5:15:26 AM
Re: Good luck, Rami Rahim
I also met Rami, and while he may not remember, I have video evidence!! :-)

Telstra's New Network Edge
http://www.lightreading.com/ethernet-ip/routers/telstras-new-network-edge/v/d-id/704861

All of that knowledge and competency is in his favor and that will, I'm sure, help settle some of the concerns of Juniper staff, customes and partners.

But his challenge as the CEO of Juniper goes well beyond all of that -- he will need to be a great politician, be able to juggle the demands of the board, demanding investors, customers, partners and unsettled senior managers all at the same time etc etc -- that's got to be tough for anyone. 
Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
11/11/2014 | 4:10:13 AM
Re: Good luck, Rami Rahim
Interesting timing.

I met Rahmi Rahem once (I'm sure he doesn't remember). He gave a brilliant explanation of the technology choices Juniper used to build the MX. He very clearly knows the technology and the market. He seemed personable enough as well, but with more than a hint of "a seriously strong backbone and nerves of steel".
Ray@LR
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Ray@LR,
User Rank: Blogger
11/10/2014 | 7:14:25 PM
Good luck, Rami Rahim
I hope Rami has a seriously strong backbone and nerves of steel.

And does anyone know which customer was at the heart of the 'conduct' questions? 
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