Riverstone's Got a New Chief

Riverstone Networks Inc. (Nasdaq: RSTNE) has got a new boss, and he should be pretty busy.

Today, the metro Ethernet vendor named former Nortel Networks Corp. (NYSE/Toronto: NT) executive Oscar Rodriguez as its new chief executive officer (see Riverstone Names President/CEO). It also announced that a Nasdaq committee has decided to continue listing the company’s ticker symbol on its exchange -- at least for the time being.

Riverstone has hit some rough road over the last few months, including an investigation by the Securities and Exchange Commission (SEC) and the restatement of financials for the last seven quarters, including all of fiscal 2002 and the first three quarters of 2003 (see Riverstone Readies Restatement and SEC Calls on Riverstone). Analysts say it’s still too early to bet on Riverstone’s turnaround.

“I think we need to take a wait-and-see approach,” says Erik Suppiger, an analyst with Pacific Growth Equities Inc. “The situation is still very difficult for Riverstone. We’ll have to give the new CEO some time to see if he can turn things around.”

Rodriguez joined Nortel in 1997 as general manager for the signaling solutions group. He became head of the company’s enterprise division when Nortel was reorganized last year (see Plastina Out in Nortel Reshuffle). Rodriguez also served as president and COO of Arris Interactive, a Nortel joint venture focused on the cable MSO market.

Rodriguez replaces chairman Romulus Pereira, who has been interim CEO since April (see Riverstone Names Chairman, Acting CEO).

“He looks like he is well qualified for the position,” says Suppiger. “But it’s a little surprising that someone would leave a pretty senior position at a big company like Nortel to join Riverstone.”

One thing is certain, Rodriguez will have his work cut out for him.

In addition to its financial restatements, which are still not complete, the company is also struggling to bring in new revenues. For the first fiscal quarter of 2004, which ended May 31, 2003, the company reported $12.7 million in revenues, with net losses of about $19.1 million (see Riverstone Posts Loss, Faces Delisting).

What’s more, the company is still quickly burning through its cash. In the first fiscal quarter of 2004 it reduced its cash by about $25.6 million -- $10 million of which was consumed by repurchasing outstanding debt. This left the company with about $196 million in cash or about $1.50 per share at the end of the quarter.

“The first thing the new CEO has to do is get the cost structure under control,” says Suppiger.

The company also announced today that the Nasdaq Listing Qualifications Panel will continue listing Riverstone's securities on The Nasdaq National Market. But the company is not totally free and clear. The panel indicated that listing will only continue on the condition that Riverstone file its 10-K for the year ended March 1, 2003, and its 10-Q for the quarter ended May 31, 2003, as well as any restatements for prior periods, by September 8, 2003.

The panel also said that Riverstone must file all of its other reports for periods ending on or before August 31, 2004, in a timely manner or it will face delisting again. The scarlet letter "E" will continue to dangle on the end of its ticker symbol until Nasdaq determines that Riverstone has come clean and is in compliance with all requirements for continued listing (see Riverstone Branded 'E' by Nasdaq).

Today, shares of the company were trading up $0.04 (2.96%) to $1.39.

— Marguerite Reardon, Senior Editor, Light Reading

Iipoed 12/4/2012 | 11:32:51 PM
re: Riverstone's Got a New Chief Nortel to Riverstoned. Had to be pushed out of Nortel. Why go to a sinking lifeboat (stopped being a real ship along time ago). RSTN has nothing to offer their customers that stable companies cannot provide. Is Rodgriquez some type of fire sale guy looking to unload RSTN?

This makes about as much sense as Roscitt of ADC going to MCI.

For both these guys it had to be about prolonging their way oversized paychecks for as long as possible.
chip0145 12/4/2012 | 11:32:40 PM
re: Riverstone's Got a New Chief This guy has needed a job for as long as I can remember.Nortel seems to be cleaning house from the top down again.They still have a lot of wall sliders in the top ranks.It is truely amazing how some of these have been able to keep their jobs while collecting borrowed money in return.Good luck to Riverstone.
litemyfiber 12/4/2012 | 11:32:36 PM
re: Riverstone's Got a New Chief You clowns should not talk about what you don't know. Oscar will be missed at NT, and will no doubt enjoy the challenge at RSTN. A class act, and a great guy. CEO at RSTN or Enterprise Solutions GM at NT? Better to rule in hell than serve in heaven I guess.

Good choice Oscar, and a ballsy one too.
Best of luck.
Iipoed 12/4/2012 | 11:32:28 PM
re: Riverstone's Got a New Chief At least NT has respect in the industry (in certain areas). RSTN is a joke. Oscar will soon become Oscar Meyer (ground meat) at Riverstoned.
Interesting to know how much of a jump in $$ he received to make the move. There certainly is no challenge at RSTN as they will soon be history. The few loyal employees left all have their resumes all over the www as they merely collect paychecks which hopefully won't bounce.
robert_rodriguez 12/4/2012 | 11:32:13 PM
re: Riverstone's Got a New Chief ... for the same loyal employees that part-took in the act of rebellion against CS. CS -- the company that bankrolled them and handed over every major telco account they "won" during RSTN first three years of sales?

... for the same loyal employees that helped close down "non-West Coast" engineering facilities after the CS split in an effort to consolidate their power in Santa Clara?

... for the same loyal employees that willing went along with the accounting shenanigans they are currently under SEC review for?

... for the same loyal employees that helped drive away several partners like TLAB and ALA?

Gimme a brake. RSTN loss of the old Yago team while sad is not such a big deal if you ask me. I have been a shareholder and observer for some time and do wish the NEW TEAM at RSTN the best.

They have some good stuff that with some Marketing and Sales savy could make them the turnaround of the Valley in the next 18 months.

I just can't understand your nasty comments lest you were let go from the company or part of the competition.

With respect to WWW resumes, well I would be marketing myself if I knew my days where counting down b/c my performance sucks. With respect to cashing in -- RSTN has more quarters of cash than 99% of the negative cahs flow companies in the Valley.

Good luck.
Iipoed 12/4/2012 | 11:32:11 PM
re: Riverstone's Got a New Chief Robert_rodriquez. First of all it is Iipoed.
If you were smart you would sell all your rstn to offset any capital gains, if you had any. Of course since you still own rstn doubtful you have any capital gains.
Never worked for C-tron, barely competed against them as they were a non entity in So. Cal except were they were willing to take no margin sales (which was almost every deal).

What good stuff? Cisco, Foundry, Extreme and Juniper have everything riverstoned has and more. Plus three of these companies are very profitable with very loyal employees.

Do you honestly think anyone would still be working there if they could find another job.

It has always been well known in the industry that you went to cabletron (Riverstone and Entersys) when no one else would hire you.

They continue to have the mentality of throw enough against the walls and maybe it will stick as long as we are willing pay customers to install the equipment.

Hey I hope they continue to stay in business, god knows this industry does not need anymore people unemploymed.

By the way I worked in this industry for the past 25 years.
robert_rodriguez 12/4/2012 | 11:32:10 PM
re: Riverstone's Got a New Chief I could go into a long email but it is better to say you sound like a Salesperson with a real nasty grudge against the company.

Also I will say that is given how bad ETS and RSTN are they are still in business all these years. And last I check ETS still sells more gear then FDRY or EXTR or for that matter every other vendor other than Cisco.

So, they must be taking lots of low margin sales and make it up in volume to STILL be in business today.

Again, good luck but I just don't think you are objective or fair one bit. I know all the bad stuff about ETS and RSTN and can say both companies are solving it with great zest.

I wish Cisco where as eager to improve instead of sitting around raping customer with poor solutions and worse ROI.
BobbyMax 12/4/2012 | 11:30:01 PM
re: Riverstone's Got a New Chief Riverstone misrepresented its business and capabilities. It also prented to the cusomers as an IPO company except that its products were 5-6 years old? What a brilliant deception. The fact is that the company never recovered fom its lies. Finally it found one country, South Korea, where they built broadband network so that the kids can watch movies and play games.

It is my humble opinion that, with this kind of history, it will not survive.
gea 12/4/2012 | 11:29:59 PM
re: Riverstone's Got a New Chief BobbyMax:

All your base are belong to us.
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