Optical/IP Networks

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
Ennovate_Bankruptcy 12/4/2012 | 8:23:36 PM
re: Redback's CEO Resigns Ennovate has worst product, not so bright engineering team, worst management team.
John Casper 12/4/2012 | 8:16:31 PM
re: Redback's CEO Resigns What kind of statement is this, and how is it related to the subject matter?

Since the problem has been raised - here is the solution. Engineering management at Ennovate is dumb - there is nothing CEO can do about it. CEO is just fine but he doesn't have guts to stand to the humpty-dumpty duo of two founders (one marketing VP and other engineering VP/cto. actually only first one founded). To really fix it - get a new VP of software engineering with back ground in edge boxes, remove the current founder/CTO as he knows as much about running engineering department or product development as my five year old daughter knows how to fly the aeroplane. Marketing VP is fine and does a reasonable job but he is too much dependent on the opinion of the CTO (his arrogant, ill-mannered, mentally unstable and know-it-all buddy) and can't make independent decision. Too much cronyism. Therefore, he should also go so that the slate is clean for the next team to try new ideas.

The Hardware team is just fine, and has done a pretty good job. All they need are a few more good guys in software, management clean up and the company will be as good as any other start. VCs need to do a Cratos on the founders without which this company may have no where to go.

Let us not blame CEO for every thing. The CEO can't do the magic if the engineering gives him a lame duck product. CEO came onboard much after the product announcement and beta trial. -- John
theraptor 12/4/2012 | 8:15:59 PM
re: Redback's CEO Resigns Ennovate has needed a change at the top for a long time. Let's get down to basics, the CEO is responsible for running a company, making the tough decisions when necessary, and changing the things that aren't working. Obviously there have been a number of problems with this company but it's the CEO's job to combine the right amount of focus, vision, management, technical, and motivational skills. All successful companies have a strong leader at the top--someone who can make things happen, set direction, and instill a sense of confidence. This guy just doesn't have it. Come on, a good CEO certainly knows how to manage his CTO and Marketing VP.

It's clear that Ennovate's CEO has just been along for the ride. Someone forgot to tell him that at some point he'd have to roll up his sleeves and steer the ship. You can't have a person who lacks fundamental leadership skills running a company. I say shame on the board of directors for not taking action, but then again, it's their money to lose.
gladysnight 12/4/2012 | 8:15:53 PM
re: Redback's CEO Resigns Well, the CEO is paid to be responsible for everything. If HE isn't, then who is?

You know, given that CEO's are a bit like coaches in sport - they're basically out of a job the day they get hired, they just haven't been told the date yet - one wonders whether many companies wouldn't be better off without one at all?

Let's face it, how many CEO's in IT&T have steered successfully through this latest meltdown? On the other hand, look at how many absolute idiots made money during the boom.

On the whole you could make a good case for just saving the millions that CEO's cost, since it is very hard to make a case for any value they've added to any company you care to name.

With a very few exceptions.
John Casper 12/4/2012 | 8:15:31 PM
re: Redback's CEO Resigns
I have known Ennovate CEO for number of years, and dealt with him when he was in Dallas. The problem of any CEO in a start up is that without having total support from VCs - you have to live with the team that you inherit. I don't think he can fire his Engineering VP/CTO for being responsible for bad job by the engineering team. Only VCs can. It is like working with hands tied behind your back. Let us not make in-appropriate comparision with a public company where board generally backs all the decision of its CEO.-John.
theraptor 12/4/2012 | 8:14:31 PM
re: Redback's CEO Resigns Well, it sounds like he didn't do his homework before joining the company. Either way, he's still incompetent, just ask anyone who has left Ennovate in the past year.
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