In a move that surprised industry analysts, Donald Reed, president and CEO of Cabletron, resigned yesterday, a week after the company posted a loss of $US6.3 million in the most recent quarter.
Reed's resignation is effective immediately, but he will remain with the company as a consultant and a board member. Craig Benson, board chairman and company co-founder, will take over as president and CEO of the company, Cabletron said in a statement.
Reed joined the company last September and at the time the company's management thought it would take Reed at least 12 months to 18 months to implement a strategy and organisational structure that would allow the company to return to a growth path, Benson said While Reed's and Benson's roles have been somewhat reversed, Benson said Cabletron will continue to exercise the same strategy Reed put in place since joining the company.
That strategy includes continued focus on network switches and network management systems, and the expansion of Cabletron's international activities and its sales channel.
Many analysts were caught off guard by the announcement and were left to speculate the real reasons for Reed's departure. Some are guessing Benson and Reed disagreed about Cabletron's long-term direction.
"Maybe they didn't have the stomach for what Reed was trying to do," said Virginia Brooks, the managing director of the Yankee Group. However, the high-profile role of Cabletron's co-founder Craig Benson may be a possible explanation, Brooks said.
"Here is a founder still running a company," he said. "In my experience it is really hard for a founder to let go."