Optical components

Avanex Axes CEO Jo Major

All of a sudden, there's a shakeup at Avanex Corp. (Nasdaq: AVNX), as CEO Jo Major got fired this morning.

This wasn't a case of "spending time with family," either -- Major was terminated, according to a press release, due to the “inability of Dr. Major and the Board of Directors to work together effectively." The company also announced that its CFO, Marla Sanchez, has resigned. (See Avanex Fires CEO.)

While the company searches for replacements, Giovanni Barbarossa will serve as interim CEO. Barbarossa has been the CTO of Avanex since May 2002.

As of last week, Avanex shares were down about 43 percent from a year previous. Still, analysts didn't think Major's job was in danger.

“People tended to have a favorable view of him. Hearing that he’s gone is a little bit of a surprise,” says Andrew Schmitt of Nyquist Capital .

Avanex gave no explanation of why Major and the board suddenly couldn't get along. But analysts think a strategy shift is in the cards for Avanex and its peers, given the pending merger of Finisar Corp. (Nasdaq: FNSR) and Optium Corp. (Nasdaq: OPTM). Other players are expected to band together in response, and it's possible Major and the board disagreed on what to do. (See Finisar & Optium Challenge JDSU.)

It's been a long struggle for Avanex. In 2003, the company acquired Alcatel Optronics and a part of the Corning Inc. (NYSE: GLW) components division, taking advantage of a market collapse that had big vendors looking to get out of the components business. (See Avanex to Buy Alcatel, Corning Units.)

Major, hired out of JDSU in 2004, has spent years trying to get Avanex back to profitability. “They’ve had to get themselves out from under that Alcatel burden,” says Schmitt. “They had all those components and there was a lot of corporate structure that encumbered them. He’s been spending the last few years un-encumbering the company from that past. That’s sort of been a ball and chain on his ankle.”

For example, Major went through the long process of laying off workers in France and eventually divested Avanex of Alcatel's former manufacturing facilities altogether. (See Avanex Drops Fabs.)

It wasn't until its first quarter this fiscal year -- the quarter that ended in November 2007 -- that Avanex finally managed to report profitability by generally accepted accounting principles (GAAP). (See Avanex Reports Q1.)

Around that time, Alcatel-Lucent (NYSE: ALU) sold off the 12.4 percent stake in Avanex it received as part of the 2003 deal. (See AlcaLu Sells Avanex Stake.)

Alongside today’s announcement, Avanex also reiterated its revenue forecast for the fourth quarter of 2008. It expects to take in between $50 million and $53 million and achieve positive cash flow.

Shares of Avanex are down $0.12 (12.26%) to $0.87 in mid day trading.

— Raymond McConville, Reporter, Light Reading

doolin 12/5/2012 | 3:37:19 PM
re: Avanex Axes CEO Jo Major If this is simply a clash of egos between Jo Major and a bunch of bean counters - I would fire the board and re-hire Jo Major.

I could be wrong - but he impresses me with being one of the few in FO who understand that innovation in the real world does not begin and end with product design.

I suspect he would rather be fired than be forced into becoming one of the herd.
Ben_Stern 12/5/2012 | 3:36:47 PM
re: Avanex Axes CEO Jo Major Thanks for your comments Mrs Major.

A beancounter.

"Shut up. Sit down. I told you not to be stupid you moron."

- Ben
Pete Baldwin 12/5/2012 | 3:33:32 PM
re: Avanex Axes CEO Jo Major It might not be related, but Patrick Edsell has also left the company. Here's what an Avanex 8-K, filed today, says:

On August 25, 2008, Avanex Corporation (the "Company") accepted the resignation of Patrick Edsell, the Company's Senior Vice President and General Manager, effective August 25, 2008. Mr. Edsell is leaving the Company for personal reasons.
Riverhigh 12/5/2012 | 3:33:31 PM
re: Avanex Axes CEO Jo Major Looking at the current events evolving at Avanex, time may well prove Giorgio Anania right with regard to the importance of mergers. If I recall correctly Georgio stated that the first significant companies to merge would benefit the most. If Finisar/Optium and Optnext/Stratalight do well, this will give credence to his argument. If Avanex and Bookham had merged 2 years ago, when credit was not tight, they may have got the funding to re-organize and today have the necessary economies of scale and breadth of product portfolio to compete against the new merged corporations. Although Alain Couder at Bookham has on many occasions insisted that they can do it alone and that there is no urgency to merge, I'm not so sure. I can envision Bookham landing in the same boat as Avanex with limited options. This is all speculation on my behalf. Time will tell.
Sign In