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Hot product, potential IPO? Maybe it's time for a change

September 4, 2000

2 Min Read
Cyras CEO Resigns

Cyras Systems Inc. announced on Friday that CEO Stephen Pearse had resigned and that Alnoor Shivji, president and cofounder of the company, would assume the title of acting CEO.

The move seems peculiar, considering that Cyras has a product in beta trials with customers and by some accounts was preparing to file for an IPO. Pearse was a professional manager who took the CEO job in July 1999. Cyras's K2 product, a high-capacity, next-generation Sonet switch, was hitting a sweet-spot in carrier needs.

But in the last week there were signals that internal strife may be taking a toll on the company. On Friday, an anonymous source phoned Light Reading, saying that many engineers were leaving the company and that some employees were questioning managerial decisions.

In a company release, Cyras officials downplayed the move, and a quote attributed to Pearse said a factor in the decision was his inability to relocate to California.

Cyras officials did not respond to requests for comment, on the Labor Day holiday in the U.S., and Light Reading was unable to locate Pearse.

"During his tenure at Cyras, Steve made significant contributions to the establishment of Cyras as an emerging leader in the provisioning of optical networking solutions to telecommunications carriers," said Mr. Shivji, who is also a member of the Cyras board of directors, in the prepared release.

But behind the kindly worded "See Ya," the timing of the move leaves many questions. By most accounts, Cyras was ramping up for an IPO, potentially to be completed by yearend. The replacement of a CEO doesn't always sit well with existing or potential investors.

Also, the management turmoil raises questions about whether the company is equipped to move to the next level. Cyras now lacks a senior manager with the experience to take a company public. In addition, Cyras founders carry some baggage of their own: They have acknowledged being responsible for the breakup of Fiber Lane, the company in which they were involved prior to Cyras (see Cyras: The Next Cerent? ). Siara and Cerent, the two other companies that resulted from the Fiber Lane breakup, have gone on to be bought and have become important pieces of their respective acquirees, Redback Networks Inc. (Nasdaq: RBAK) and Cisco Systems Inc. (Nasdaq: CSCO).

-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com

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