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Infinera's CFO Quits

Ray Le Maistre
6/30/2006

Up-and-coming optical vendor Infinera Corp. (Nasdaq: INFN) today announced it has a new CFO, Duston Williams. (See Infinera Names New CFO and Infinera Inc..)

What's strange about that, other than someone being called Duston? (A name so rare it wasn't ranked in the most recent U.S. census).

Well, Infinera is believed to be working towards an IPO, and quite a big one by all accounts. So any change in the top ranks, especially the CFO, is of particular interest. (See Infinera: $1B IPO Imminent?.)

Infinera spokesman Jeff Ferry didn't have a whole lot to say about what happened to the former CFO, Bill Zerella. "Um, um, um…" says Ferry. "He moved on."

Really? Did he quit or was he pushed?

"He left for another opportunity. He has another job to go to. It's a recent development," Ferry says. Where's he going then? That must be some job if he's passing up a potential IPO windfall.

"I don't know," says Ferry, "but he does have another job."

A financial analyst contacted by Light Reading believes Infinera is in a quiet period leading up to an IPO filing and is generating revenues well beyond the $100 million a year run rate suggested by the vendor earlier this year. But even he is perplexed by the move. (See Infinera Numerates Its Numbers.)

"In the run up to an IPO you'd expect some management changes, but to think that the CFO would leave for another job at this point doesn't seem consistent. You'd think he'd stick around for a hot IPO. If you leave a company, generally you leave your options behind," says the analyst, who requested anonymity.

So what about the new boy, Williams? Has he been brought in to help with Infinera's IPO process? "I can't comment on any forward-looking strategy. Duston is a first class CFO. He's here to help grow the company," adds Ferry during a later conversation, after having found that Williams was unavailable for press interviews today.

Ferry also declined to comment on industry speculation that Sprint Corp. (NYSE: S) is one of a number of unannounced carrier customers for Infinera.

— Ray Le Maistre, International News Editor, Light Reading

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photon2
photon2
12/5/2012 | 3:50:02 AM
re: Infinera's CFO Quits
A company CFO must have experience, and is often put in place by the VC's...my guess there's no hidden issues here, but more likely they found a better candidate for the IPO process, which requires more than just a numbers guy.
P2
netmeister
netmeister
12/5/2012 | 3:50:01 AM
re: Infinera's CFO Quits
Assuming he wasn't fired for bad behavior, I'd be jumping for joy at getting out right before a $1B IPO. Now all those options are free to be exercised and sold without issues of lockups, insider trading windows, etc. Heck, it may have even been his idea.
Dredgie
Dredgie
12/5/2012 | 3:50:00 AM
re: Infinera's CFO Quits
Who are these guys selling to / through? Any idea of revenues?
ninjaturtle
ninjaturtle
12/5/2012 | 3:50:00 AM
re: Infinera's CFO Quits
Why no lock-up? Just curious. I thought most IPOs have a 6 month lock-up after the company goes public? Yes?
longshort
longshort
12/5/2012 | 3:49:59 AM
re: Infinera's CFO Quits
I think he will have lesser restriction when cashing in on his option/share if he was no longer an employee or insider. There could still be some blackout period imposed by the company.

Given the new CFO has such extensive experience and I presume good reputation, I am sure he won't have hop on board if he was not convinced that Infinera is a real deal. He has his reputation and money at stack by taking on this challenge. I am sure he is convinced he will be rewarded handsomely in very short order.
redface
redface
12/5/2012 | 3:49:58 AM
re: Infinera's CFO Quits
Infinera most likely did not push for its CFO to leave at this point. This personnel change may indicate significant strain inside Infinera.
optical
optical
12/5/2012 | 3:49:55 AM
re: Infinera's CFO Quits
whatever shares Zerella had vested are his and there is no special lock up of his shares since he is no longer part of their executive team. Knowing the players involved, Zerella is "have to be in control" type of guy who understands very little about sales and customers in this space and my hunch is that he butted heads with the rest of the team who understands customers. These guys have a great track of success. Zerella on the other hand is a control freak who is very limited in market /start up knowledge in terms of what it takes to have success.
very_objective_dude
very_objective_dude
12/5/2012 | 3:49:53 AM
re: Infinera's CFO Quits
P2, you may be right. However, he might be fired as well for varying reasons:
- He might have violated some rules about quite period.
- He might have cranked out wrong numbers that may be putting the company on a hot seat, such as $10million vs $100million in revenue.

I also agreed with the article that he was not just going to leave on a free will. He must have been fired for bad behavior or pushed out with a big package. To have him pushed out because of "liking" at this point would be an excellent recipe for a civil lawsuit, especially if there is no "golden parachute".
Alpine
Alpine
12/5/2012 | 3:49:53 AM
re: Infinera's CFO Quits
That's not entirely true, even though he has vested shares unless he sells in the IPO he will be restricted by the SEC from selling immediately. When a company goes public the only shares that are freely tradeable are securities that have been registered, which is what an S-1 does. There are exceptions to this in rule 701 and rule 144. In the case of Zerella he may be able to sell shares subject to rule 701 however it still imposes a 90 day wait period on him.
whyiswhy
whyiswhy
12/5/2012 | 3:49:51 AM
re: Infinera's CFO Quits
A few things to consider:

Loss of the CFO at this point is basically saying that he cannot take the company public.

They question is: why he could not take it public?

The only thing that makes sense is that the books and story do not hold together.

He probably told the board that, and they fired him.

CFO's are easy to replace; I am sure KPCB has a string of them to call on.

-Why
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