Occam Shareholder Group Opposes Calix Merger

Shareholders controlling nearly 20% of Occam's stock say Calix's offer doesn't approach what the company's really worth

Phil Harvey, Editor-in-Chief

September 27, 2010

2 Min Read
Occam Shareholder Group Opposes Calix Merger

Three shareholders that together hold about a 19 percent stake in Occam Networks Inc. (Nasdaq: OCNW) are opposing the company's pending merger with Calix Inc. (NYSE: CALX).

In a letter emailed to Occam chairman Steve Krausz today, the shareholders -- Michael Steinhardt, Herbert Chen, and Derek Sheeler -- voice their disapproval of Occam's decision to sell itself now "just as revenues are beginning to ramp."

"We believe that the board of directors of Occam has acted, once again, with reckless and wanton disregard for its shareholders, and we hereby demand that the board move immediately to open up the sales process by auctioning the company to the highest bidder," the letter states.

The letter also cites a Light Reading article -- "Did Calix Get a Bargain on Occam?" -- as an indication that some are perhaps wondering if Occam sold itself short. [Ed. note: The article didn't express an investment opinion, of course. It explored how one company paying a premium of more than 40 percent for another could be considered a bargain.]

The 14-page letter makes it clear Occam's shareholders are challenging "both the process and the price" of a combination with Calix. The shareholders even accuse Occam's management of making "no attempt" to "shop the company or even check the market."

"So, while it’s easy to understand why Carl Russo, the CEO of Calix, would want to buy Occam and consolidate his market share in front of such an opportunity, it’s not quite so clear why you would want to sell at such a time, and for no premium at that," the letter states. "In 1999, Carl sold Cerent, then a nascent three year old company, to Cisco for $6.9 billion. Clearly, he knows a once in a lifetime opportunity when he sees it. Just as clearly, you don’t."


Then, just before recounting Occam's accounting scandal -- the event that made the company No. 1 in our list of "2007 Top Ten: Share Shrinkers" -- the shareholders really pour on the sugar: "Simply put, we believe the history of corporate governance at Occam is a history of abject and utter failure."

Occam execs could not be immediately reached for comment on this story. Calix execs, through an outside PR agency, via email, say they haven't seen the shareholder letter and do not comment on ongoing financial or legal activities.

— Phil Harvey, Editor-in-Chief, Light Reading

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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