Redback's CEO Resigns
Vivek Ragavan, president and CEO of Redback Networks Inc. (Nasdaq: RBAK), resigned today. Redback chairman Pierre Lamond will take the CEO spot temporarily, and a committee of managers will handle the company’s day-to-day operations.
The move comes after a couple tough quarters and a declining share price at the San Jose, Calif.-based company. Ragavan, the former CEO of Siara Systems, took over from former Redback CEO Dennis Barsema with the mission to aggressively move Redback into the optical networking market with the SmartEdge product. However, that transition has not been smooth, as the once high-flying company's growth rate has flattened and its operating results have slipped into the red (see Redback Bleeds Red and Redback Hits the Wall).
The management committee supervising the CEO search is made up of individuals that come mostly from larger firms and have been with Redback less than three years. This group includes Redback's sales boss Richard Bibb, a former Cisco Systems Inc. (Nasdaq: CSCO) executive who has been with Redback since August 2000 and assumed his present post in February; former Siara executive Pankaj Patel, who leads Redback’s research and development team; Kevin Q. Smith, Redback’s operations boss, who also joined in August 2000 and is also a Cisco veteran; and Dennis P. Wolf, the CFO who joined Redback in January.
Ragavan, who was not on this afternoon’s conference call with analysts discussing his departure, took the CEO post last year, as Dennis Barsema left to join Onetta. He joined Redback in 1999 when his company, Siara Systems, was bought in a stock deal worth more than $4 billion despite having no finished product, no revenues, and no customers.
“This will not be business as usual,” Lamond said during the conference call. He said the company has hired Heidrick & Struggles to assist with finding a CEO.
Lamond also said Redback is serious about cutting costs, noting it would “shelve some R&D efforts” and approach cost-cutting in operations with “renewed energy.” However, he said he “envisioned no further layoffs” as a result of any changes to Redback’s business.
"Just because Vivek has resigned we don't plan to let the company coast as we spend the next two to three months looking for a CEO," Lamond added later. "Some [R&D] programs are fundamental to our long-term strategy, some are tactical, some of them may be dropped."
On the call, Redback managers smacked down rumors that several IP engineers had recently left and customers had returned some of its products. “We’ve had no customers return any SmartEdge products,” said Bibb.
“We seem to be the ones picked on the most [by industry rumors] in the last week or two,” added Wolf.
As the managers passed analysts' questions around like hot potatoes, it came out that Redback expects the new IP line cards for the SmartEdge product to be in trials in Q3 and reaping revenues in Q4. The IP features of the product, a key differentiator, are crucial to the product's success and have slipped behind schedule. The company orginally said the IP features would be available in Q2 (see Redback Completes IP ASICs).
Lamond said that Redback and Ragavan agreed to part ways because Redback needs a chief with stronger operations experience than the technically inclined Ragavan. His departure was immediate because “the board decided that having a lame duck CEO was not in the best interests of the company,” Lamond said.
- Phil Harvey, Senior Editor, Light Reading