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A New Boss for Siemens ICN

Light Reading
News Analysis
Light Reading
9/21/2001

When Siemens AG (NYSE: SI; Frankfurt: SIE) bought Efficient Networks Inc. (Nasdaq: EFNT) for $1.5 billion back in April 2001, it may have gotten more than it bargained for. Less than six months later, Mark A. Floyd, the ex-CEO of Efficient, has been tapped for the president's job at Siemens' Information and Communication Networks Inc.(ICN) division (see Siemens Gets A Head).

To all appearances, it looks like a good move both for Siemens and Floyd. Siemens ICN has been on the hotseat since its latest financial results soured the company's quarterly report in July (see Siemens Announces 'Mixed' Results), sending then-president Roland Koch in search of another job (see Nortel to Grab Koch?).

Like many companies, ICN faces a range of issues, the greatest of which being how to best approach a market in which customer demand has changed swiftly and drastically, leaving many existing products in the lurch.

Floyd, 45, may be just the man for the job: He has a track record of making sudden shifts in business models. Back in 1996, three years after founding Efficient Networks, he decided to abandon his startup’s initial focus on ATM (asynchronous transfer mode) and go for broke in developing DSL (digital subscriber line) equipment.

"We realized that the dynamics of the market we had initially targeted -- selling ATM switching and routing devices to major computer manufacturers -- were shifting significantly," Floyd says. "Fortunately, we were able to turn our focus to developing end-user DSL devices for fast Internet access."

Interestingly, Floyd still sees ATM as a key item in carriers' present networks -- although it may not be a good bet for startups: "While IP or IP over ATM will likely be tomorrow's transport technology of choice, it's clear that service providers are and will be using ATM for the foreseeable future."

Floyd doesn't regret his change of plan at Efficient Networks. "Where most companies would have given up when their initial vision failed, at Efficient we saw that our first idea was no longer valid, and we quickly changed course so that our company could succeed," he says.

The move to DSL turned out to be a good one: Efficient successfully went public in 1999 with Floyd at the helm. And when Siemens took over this past April, he became ICN's head of carrier access.

Thomas Ganswindt, ICN's chairman of the board and president of worldwide operations, made it clear that the job as ICN's president won't be easy, and that expectations are high. "Mark will be responsible for restructuring Siemens' telecommunications business in the U.S., the single largest telecommunications market in the world," he said in a prepared statement.

Floyd's new job will tax his expertise in the carrier marketplace, which stems mainly from his years at Efficient Networks. From 1984 to 1991, he was COO at Networth Inc., an Ethernet hub, interface card, and switch company. From 1991 until he founded Efficient Networks, he was CFO for Interphase Corp., a server and LAN vendor.

On the plus side, when at Efficient, Floyd established relationships with BellSouth Corp. (NYSE: BLS), Covad Communications (Nasdaq: COVD) (who also was an investor), SBC Communications Inc. (NYSE: SBC), Sprint Corp. (NYSE: FON), Telefònica, and WorldCom Inc. (Nasdaq: WCOM). He also has a longstanding relationship with Siemens management, which began when the company invested in Efficient Networks years ago.

In tackling the ICN job, Floyd sees himself primarily as a manager, one who can match the right person to the right job and call in expertise as needed, even if he doesn't have it himself. "Empowering the right people to help the organization succeed" is what he feels he has been best at in his career so far. "It's not magic," he says, "but it does involve chemistry."

It remains to be seen whether Floyd can achieve the right mix to help get ICN moving again. By all indications, he's well prepared to try.

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com

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