Verso President Jaffe Jets
Verso’s board of directors is instead taking its chances with Monty Bannerman, who came to the company as a consultant in 2004 and eventually became VP of strategic initiatives (see Verso Adds to Board). Bannerman will take over as president and COO until October 1 and then replace Steve Odom as CEO.
“It was a board decision -- they think this new guy is more influential in the carrier space and has better relationships,” says Pacific Growth Equities Inc. analyst Joe Noel who had just spoken with Verso CEO Steve Odom. “He had been leading the company anyway."
Verso officials did not return calls for comment Monday. Wall Street so far is not reacting favorably to Jaffe’s ouster. Verso stock has lost 22 percent of its value after the announcement today, and more than 20 million shares have changed hands.
“What’s happening is a group of hedge fund companies in the Northeast who apparently pushed to get Lew Jaffe installed as COO of Verso, apparently they’re pretty upset today and they are just bailing out,” Noel says.
Jaffe came to Verso in 2004 with a track record of rehabilitating ailing companies and getting them sold off (see Verso Aims to Stay Single ). Verso, at the time, was pinning its hopes to its Clarent softswitch, which it came by through a 2003 acquisition, but failed to dominate the market.
Verso officials now say the softswitch market has been “commoditized” and have refocused the company on enterprise gateways and revenue assurance applications. Bannerman was the brains behind that move, which the company credits with its improved first-quarter revenues.
While first-quarter revenues improved 28 percent year-over-year and sequentially, the company’s losses widened to $6.4 million and its cash sunk to a dangerously low $12 million (see Verso's Extreme Makeover).
Yet on Verso’s quarterly earnings call with investors July 25, Jaffe was downright chirpy about the company’s prospects.
One analyst asked Jaffe why he was so comfortable with Verso’s product lines after being with the company eight months. “Because I’ve seen in the marketplace, when we go up against other suppliers we don’t always win the deal but our products are always technically superior,” Jaffe replied.
— Mark Sullivan, Reporter, Light Reading