Stitt Gets Less Extreme
Extreme announced late Friday that Stitt will be stepping down as CEO "during the 2006 calendar year." (See Extreme CEO Steps Down.)
An independent director on Extreme's board is spearheading the search for a replacement, and Stitt is aiding in the search.
Stitt was a founder of Extreme in 1996, along with Stephen Haddock and Herb Schneider, who are Extreme's CTO and vice president of R&D, respectively. So, Stitt's departure marks a life-changing event for the company.
He won't be gone for good, though. After a new CEO takes over, Stitt will become Extreme's chairman. He'll replace W. Michael West, an outside director and former Larscom Inc. (Nasdaq: LARS) executive who joined Extreme's board in 2004.
Extreme's run of disappointing earnings appears to be the catalyst for the decision to replace Stitt. For two quarters running, Extreme has missed expectations and reported problems in its North American business.
The most recent stumble began in early April, when Extreme noted its third-quarter revenues would be near $85 million, as opposed to the $90 million or more previously predicted by the company. Then, when formally reporting earnings in April, Extreme executives gave signs that the fourth quarter could be another slow one. (See Extreme Lowers Q3 Outlook and Extreme Slump Continues.)
Analysts like Extreme's technology, which includes the BlackDiamond 12K, a 10-Gbit/s Ethernet switch aimed at the hot carrier-Ethernet market. (See Extreme Joins Carrier Ethernet Chorus.)
But the company continues to have problems with its business, a situation compounded by apparent difficulties in retaining sales personnel.
"They don't have any momentum," said analyst John Mark Duncan of Pacific Growth Equities Inc. , shortly after Extreme's April earnings call. "Every time they plug a hole, another one comes up."
Extreme stock had fallen 5 cents (1%) to $4.50 on Friday; after the announcement, the stock remained flat in after-hours trading.
The stock is up 8 percent from its year-ago price of $4.17. But that year has included some jagged ups and downs; the price of $4.50 is 15 percent lower than the 52-week high of $5.30. — Craig Matsumoto, Senior Editor, Light Reading