August 17, 2012 · 0 Comments
It’s pretty rare for the CEO of a public company to up and quit before a successor is named. But on the heels of a beat-the-street quarter, Brocade CEO Michael Klayko did just that.
Today the company announced his resignation. It’s looking for a new CEO.
Klayko, who has been at the helm for seven years, will stick around until the new person is hired.
Brocade makes network equipment for data centers. It competes with Cisco and others. Its biggest product is a switch that connects multiple storage systems together, and it has been the market leader with that for years. But Cisco has grown its market share considerably in this area in recent months.
Brocade is an odd bird in the world of network equipment makers. For years, it’s been searching for a buyer.
In January, Reuters reported that Brocade was talking with at least half a dozen potential buyers including a long list private equity funds like Silver Lake Partners and Bain Capital. But here we are in August, with no announced sale and now, a CEO that has given up.
That was at least the third attempt that Brocade had made to find a buyer. It had reportedly been in talks with HP in 2009 but couldn’t come to an agreement over price. Instead, HP bought 3Com for $3.1 billion.
Brocade actually beat the street with earnings reported today. Net income hit 9 cents EPS or $43.3 million, compared to $2 million, or break even on EPS, a year earlier, reports Reuters. The year-ago period included a $25.5 million write-off on debt-related costs. Revenue was $555.3 million. Non-GAAP EPS hit 14 cents.
Analysts expected non-GAAP earnings of 12 cents per share, on revenue of $536.6 million.
But the company’s stock has been languishing at well under $10 a share for years, crashing as low as about $3 earlier this year. It is trading at about $5 a share now.