Optical/IP Networks

Kruep Leaves Redback for Procket

Redback Networks Inc. (Nasdaq: RBAK) is losing its top sales boss, Randall Kruep, to Procket Networks Inc., where he’ll become CEO, the companies announced today.

Today Redback announced a reorganization in which former Cisco sales executive Richard Bibb was named Kruep’s successor as senior vice president of worldwide sales. A bit later, Procket followed up with its own announcement naming Kruep as its new CEO (see Redback Redraws Sales Team and Redback Biggie Named Procket CEO).

The news is bad for Redback and good for Procket, despite the fact that Redback is replacing Kruep with a former Cisco executive. At Redback, Kruep built a monster sales force that drove much of Redback's past success, winning accounts for the Subscriber Managemet System (SMS) at nearly all the major telecom carriers. At Procket, Kruep will join routing legend Tony Li, adding heft to the management team of the hot company (see New Kid on the Cisco/Juniper Block). Several Redback sources had commented in the last few weeks that Kruep was entertaining offers from several startups and that they thought he would make a solid CEO.

Kruep joined Redback in September 1997 and has built an impressive sales team of many former Cisco Systems Inc. (Nasdaq: CSCO) folks. (Kruep himself was Cisco regional sales manager from 1992 to 1996.) His departure leaves questions as to whether the organization can pick up the slack, and the prospect may have been weighing on Redback investors over the past few days. Redback shares have lost roughly 15 percent in trading since early yesterday, when news of Kruep's departure started leaking into the market, according to Wall Street sources.

Some analysts, however, see the departure as part of Redback's transition from the Subscriber Management System business to the SmartEdge optical product line.

“[Redback] obviously made a conscious decision to trade margin for footprint on the optical side, and they’ve come through with some big customer wins so far,” says Tim Savageaux of W.R. Hambrecht & Co. (see Redback Edges Into Qwest and Redback Lands Deal With Williams ).

Redback has made a number of transitions in the past year. Former CEO Dennis Barsema left to join a startup, Onetta (see Redback's Barsema to Lead Startup), handing over the CEO spot to Vivek Ragavan. And last year Redback also installed Cisco veteran Kevin Q. Smith as its senior vice president of operations. Smith is charged with guiding Redback's outsourced manufacturing operations as the company's product mix changes. Also last year, former Lucent exec Lars Rabbe was added to the Redback roster as CIO.

On Thursday Redback announced that Dennis P. Wolf would take the CFO spot. Wolf replaces Craig Genter, who announced his retirement late last year.

It all points to some major changes at Redback, and some observers are nervous that it's all happening at once.

"The defections are going to pile up," says one fund manager, speaking anonymously. "It's going to take the whole sales force working like mad to make the quarter, and if they do make the quarter there won't be anything left."

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com
DCITDave 12/4/2012 | 8:55:26 PM
re: Kruep Leaves Redback for Procket Redback's got a lot to prove as Mr. Kruep heads out the door. Will they make their quarter or should they start begging the Street for mercy?
nboggs1 12/4/2012 | 8:54:37 PM
re: Kruep Leaves Redback for Procket Why is there concern over RBAK making its Qtr? The guy didn't leave for a similar position at a startup. He is getting a promotion to a CEO position. There should be no concern over this move in my opinion.
DCITDave 12/4/2012 | 8:54:34 PM
re: Kruep Leaves Redback for Procket I agree that Kruep was leaving for reasons unrelated to Redback's financial situation. But the question is a fair one and worth asking anytime a public company loses a valuable person in the executive offices. Redback will either continue to show resiliency or it'll miss a step. Either way, it's always worth asking how they'll handle change.
HarryPotter 12/4/2012 | 8:54:08 PM
re: Kruep Leaves Redback for Procket does anyone have any data on additional salesforce turnover at rbak? i'm wondering how many people kreup has taken with him.
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