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Optical/IP

Russo Returns

    Guess who's back? Back again?
    Russo's back! Tell a friend.


Carl Russo, the former don of Cisco Systems Inc.'s (Nasdaq: CSCO) optical networking business, has returned to the telecom industry with his usual flair, say well-connected sources in Santa Rosa, California's Telecom Valley. Though he swore off operating roles once upon a time, Calix Networks chairman Russo has returned to become the equipment maker's president and CEO, sources say.

Mike Hatfield, Calix's first CEO, isn't going anywhere. He's taken the title of chief strategy officer and will continue to drive Calix's product strategy, a source says. At least from the onset, this doesn’t look to be a repeat of what happened at Cerent Corp., where Hatfield grew a fledgling business, handed it off to Russo, and then moved on.

Russo retired from Cisco in May 2002. He'd been at Cisco since late 1999, when the networking giant bought Cerent Corp. in a deal worth nearly $6.9 billion in stock. Russo's reasons for retiring in May included spending more time with his family and taking time to drive in the CART Toyota Atlantic Championship series.

There's no word on how Russo made out with the family, but behind the wheel he didn't do as well as he had in the mid 80s, when he was driving a Formula Ford in the Skip Barber Racing Series. Russo drove 20 races in the Toyota Atlantic series with 11th place being his best finish, according to a report in the San Jose Mercury News. In prize winnings, he placed 22nd in a field of 38. Driver Aaron Justus finished the season for Russo's team, and next season Justus will do the driving, with Russo listed as the team's owner.

Sources won't speculate on the reasons behind Russo's return. However, his recent racing experience and his past executive roles offer two hints: First, he knows how to build and run a business; and second, as he gets older, he knows when to step aside for the sake of giving his team a better chance to win.

Calix declined to comment for this article.

— Phil Harvey, Senior Editor, Light Reading
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optical_enthu 12/5/2012 | 12:53:41 AM
re: Russo Returns So does that mean Calix is shipping the products to big customers or does it mean that Russo is there to save it from a big disaster ?
DCITDave 12/5/2012 | 12:53:40 AM
re: Russo Returns Great question. We'll find out soon.

ph
Sisyphus 12/5/2012 | 12:53:35 AM
re: Russo Returns
The CSO title is so very 3 years ago, isn't it? Who else is affording one these days? :-) I for one would not feel all too safe in a job that doesn't touch operational stuff these days... then again, probably the pay doesn't suck and it's not the ultimate grind job... :-)

In general, I am kind of over the management the big names the industry had 3 years ago and that skillfully guided the industry into overheat with their aggressive promises. I'd probably done the same in their position, mind you, but nevertheless I think our industry needs far more new blood at the top. The old management elite has been quite devoid of new ideas and utterly lacking in vision in this new environment. Heck, maybe it'd be better to bring the ancient Ma Bell savvy guys out of retirement, they probably understand what needs to be done better than all the guys with persistent dotcom hangover syndrome.
terrarooter 12/5/2012 | 12:53:32 AM
re: Russo Returns
Calix is a Cerent wannabe

Russo is Cerent

Now Russo is Calix

So Russo is a Russo wannabee ?
Ringed? 12/5/2012 | 12:53:21 AM
re: Russo Returns Come on Phil you can do better than this.

What's in a name. Well its my opinion that they brought Carl in as CEO because they are going to need to raise some more cash and try to stave off being washed out to sea when the next round of funding does come in. That's all that name is going to do and who knows if it will help but Carl would be a much better leader in that regard as opposed to Mike Hattfield.

Ringed?
stuartb 12/5/2012 | 12:53:15 AM
re: Russo Returns on the reasons behind Russo's return.

Speculation isn't needed. A BoD never replaces a CEO unless they are disappointed with his/her ability to deliver.

Word is that the Calix product can't win the big deals because it's too expensive as an access box and transport just doesn't work.

-Stu
BobbyMax 12/5/2012 | 12:53:11 AM
re: Russo Returns Calix knows it very well that it cannot bring any fundamental changes to the access loop. Based o a little bit I know about Calix, it just like how a farmer arranging his barn> Being in stealth mode means access to more and more money without being exposed. A real, sincere and honest company applies for a patent. It appears to me know that there are no substantial ideas to make a difference. The company does not have any partnership and no endorsement from RBOCs.

Its founders and management think that references to Cerent would make it very worthy in the eyes of the investors and other outsiders. Cisco payong $7Billion to acquire Cerent was not a heroic act but merely a desparate act. Every company located there wants to think performance of Cerent. It is a matter of concern when the Calix management is praised simply because they were associated with cerent.

Calix also claims to advance all optical networking. This is not likely to happen. Legacy systems and billions and billions dollars ionvestment is not going to disappear.

Calix falsely promotes the concept Services Network. This knowledge has been known all RBOCs for at least 10 years. There was also keen awareness on integrating services with the transport network.
silenceofthelambdas 12/5/2012 | 12:53:09 AM
re: Russo Returns stuartb wrote:
"A BoD never replaces a CEO unless they are disappointed with his/her ability to deliver."

Stu,
It is true that often a BOD will replace a CEO if they are disappointed with past results. A change in command can also serve the purpose of diverting blame from other deficient areas of the company (not excluding the BOD themselves!), or be used to signify and promote a G«ˇturning pointG«÷ of some kind. It can also have the side-effect of giving the staff a jolt of motivation. In such a case, changes to organization and headcount may follow suit.

However, it is also common that CEOs are replaced for other reasons, such as a mismatch between the companyG«÷s needs and the CEOG«÷s strengths G«Ű this often happens when a company has been successful in delivering an initial product, and therefore need a leader who can turn the companyG«÷s strength as a development organization into an efficient delivery machine (i.e. strong R&D => strong Operations). In such a case you can count on changes in organization and a change to the mix of R&D and Production headcount.

There are other cases where the impact is limited:
Some CEOs are in their element in small teams, and the success of their endeavors outgrows their ability and/or enjoyment in their role to lead and/or manage. It also can happen by request G«Ű there are at least a couple of cases wherein CEOs of telecom companies have accelerated their succession plans and worked with the BOD to get them out of the meat grinder, as the benefits and liabilities of those positions have changed for the worst over the past couple of years.
Of course sometimes itG«÷s not a choice (see WorldCom, Enron, etc.).

My point is that there are numerous other good reasons to change the CEO (including successful delivery) beyond the one that you stated as the singular cause. If my information is correct, your company had a change in CEO not too long ago, and the reports and opinions about that succession cited more than one factor in the decision for change.
- SOL

Disclaimer: I have no existing or intended interest in Calix, nor ties to Russo.
lightbeer 12/5/2012 | 12:52:57 AM
re: Russo Returns Maybe Russo was brought in to try to sell the company before things get worse. Just a thought.
whyiswhy 12/5/2012 | 12:52:53 AM
re: Russo Returns Silence:

In most companies the reason for replacing the CEO is usually just a raw power / money struggle between the BOD and the CEO.

The stuff about bringing in someone better is not always the case. For example, in many start-ups, it's another step (in addition to down rounds and extended vesting) towards getting rid of the founder share "problem". If done right, they can show increased valuation (for the VC) even after a down round (for the start-up).

In the particular case of Russo, it is more likely he is being brought in to dress the pig for market / next round (same thing these days).

-Why
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