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Test & Measurement

Spirent Dumps Its CEO

Spirent has axed its CEO of nearly five years and begun the search for his replacement as the test and measurement company looks for fresh ideas that will help it break into new markets.

Bill Burns was appointed as Spirent Communications plc CEO in late 2008 and subsequently oversaw sales growth, a number of acquisitions and a greater focus on the mobile broadband test systems market. (See Spirent Promotes Burns, Spirent Looks to LTE in Testing Times, Spirent 2011 Operating Profit Hits $122M, Spirent to Buy Mu Dynamics, and Spirent to Buy Fanfare.)

But sales were flat in 2012 and both revenues and operating profit fell sharply during the first half of this year, effectively signaling the end of Burns's tenure. (See As 4G Boosts Anite, Spirent Suffers, Spirent Sticks With R&D Strategy and Spirent Reports 2012 Profit of $111M.)

An official company statement says only that Burns has been replaced with immediate effect by CFO Eric Hutchison and that the search for a long-term replacement is underway.

A spokeswoman at Spirent's financial relations advisers, FTI Consulting, said that in light of the recent financial performance, the Spirent board decided it was the right time for a change in management (even though it has only promoted the long-time CFO as temporary CEO) and that the company is seeking a CEO who can be more "responsive" and take the company into adjacent markets such as cybersecurity and enterprise testing. "The board is looking for a CEO with a broader range of experience" beyond telecom, she added.

— Ray Le Maistre, Editor-in-Chief, Light Reading

Carol Wilson 9/5/2013 | 12:33:29 PM
Re: Looking outside telecom? Loring, I agree with you that it would be very hard for Spirent to spread its wings beyond telecom - that's why I think they may be looking more for a fresh perspective.
Vishnu Goel 9/5/2013 | 12:14:05 PM
Re: Looking outside telecom? These are natural questions when outside Telecom or T&M industry the CEO is being searched.Whenever you look for replacement ,the board is interested in acquiring wider management bandwidth, relationship with adjacency ecosystem and newer core-skills the organisations needs to acquire.Many or most of the T&M companies have got stuck at some point in their life-cycle and couldnt get out of the pit.Invariably whenever they hired external (wo)man they somehow slowly ease him/her upstairs and let some other "company man" do the operations.Vishnu Goel T&M +919810101238 
Loring Wirbel 9/3/2013 | 1:06:19 PM
Re: Looking outside telecom? Carol, seems to me in the last decade Spirent has made three or four attempts to configure T&M equipment for embedded markets outside telecom, with only meager results.  Your guess may be absolutely right, but I'm wondering if the board is truly aware how tough the market expansion will be.

 
brookseven 9/3/2013 | 1:00:37 PM
Re: Time up? The challenge is (and this is true in just about all companies) that change is hard.

There are two well known "traps" in the growth phase of a business: Founder's Trap and Success Trap.  But even if these are overcome, people face the re-invent or die phase once a business matures.  Very few businesses are able to navigate those waters and even fewer without a change in leadership.  Even then a leadership change may not help.

I look at my two local comm equipment companies Calix and Cyan.  They are in different states, but face change challenges.  With Calix, its what are they going to do to become sustainably profitable?  With Cyan, its will they actually make the transition to public company successfully?

You have to question the CEO in each of these two cases.  With Russo, one would have to say objectively that this has been a LONG, LONG time and yet none of the plans nor all that money in has really built Calix into a long term business.  Their nearest competitor is Adtran and you would have to say that Adtran is in a lot better shape.  For Mark Floyd, you have to look at his entire team.  None of the senior folks there have done well outside the private company startup environment.  Will he start to turn them over?

seven

 
mendyk 9/3/2013 | 12:50:06 PM
Re: Time up? Agree that it's very very difficult to change the established order, which works just often and well enough. It's too bad that in many or most cases, a company has to hit an iceberg before an ineffective CEO is put overboard, and in the deluxe escape pod at that. It's clear that continuity, stability, etc. are important, and you don't want to run somebody out just because the calendar says it's time. Still, for most people the instinct is to hold on just a little too long. It's understandable, but it can lead to situations in which new ideas and approaches just don't get tried.
brookseven 9/3/2013 | 11:29:00 AM
Re: Time up? Dennis,

 

Not sure that term limits would work any better in private than they do in public.  Both realms have governence issues, but mine would start with...

1 - Public Company Chairpersons MUST be non-Executive.

2 - BoD members MUST have term limits - including management personnel.

3 - No more than 1 BoD member can be an employee.

4 - All BoD support staff must be external and produce Qs and Ks.

The last bit is probably the most confusing.  I was in a situation once where the BoD asked the Management BoD members to leave so that a situation could be discussed with other management members.  However, that left several other employees (who reported to the CEO) in the room to report what was said.  Hard to have actual private conversations.

Secondly, the BoD should be producing the Qs and Ks as its report of the corporate performance to the REST of the shareholders.  Right now as it is a Management Report it leads to a desire to massage the numbers to what they want them to be.  For example, I remember quarters that were "coming in hot" in terms of GM so people upped the Warranty Reserve to tone down the quarter and provide a smoothing function.  I don't think the average investor understands how gray (or grey :) ) an income statement is.

seven

 
mendyk 9/3/2013 | 10:52:54 AM
Time up? Is there a case to be made for a term limit on CEOs? The trick would be to ensure that they are making decisions that have long-term benefits. So like the parachute doesn't open until X number of years after departure.
[email protected] 9/3/2013 | 10:21:42 AM
Harsh move? Is Burns a victim of market conditions or was his time up?

 
Carol Wilson 9/3/2013 | 10:21:22 AM
Looking outside telecom? It's interesting to me that Spirent's board wants someone from outside the telecom sector as a new CEO.  I wonder if that thinking stems from wanting someone to think non-traditionally about how to expand Spirent's market or because they want to take their capabilities well beyond the telecom realm. 
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