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QLogic opened last week by declaring it has 8-Gbit/s HBAs and switches available, and ended the week by quietly disclosing the resignation of its president and COO Jeff Benck.
The connection between the two pieces of news isn’t yet clear, but until Friday both 8-gig and Benck were considered keys to QLogic’s future.
Former IBM exec Benck has been considered the likely successor to CEO H.K. Desai since joining QLogic last May. He has been the vendor’s front man with Wall Street as well as in the storage industry with 8-gig and the emerging Fibre Channel over Ethernet (FCoE) protocol. Benck was quoted in QLogic’s 8-gig press release last Monday, and he even did an interview on QLogic’s strategy later in the week with the Orange County Business Journal Online for a story that appeared today.
QLogic did not even issue a press release on Benck’s resignation. It filed a notice with the SEC on Friday afternoon – a time when companies often release news they want to slip by with little scrutiny.
“This is quite a shock,” a financial analyst who covers QLogic said in an email to SearchStorage.com after hearing the news.
A source with knowledge of QLogic said Desai told Benck he would not renew his contract, which expires May 1. The move comes as QLogic and its long-time HBA rival Emulex battle to get a leg up on 8-gig and FCoE, and as switch vendor Brocade makes its move into the HBA space. This is an important time for storage networking vendors as they prepare for a coming convergence between Ethernet and Fibre Channel networks.
Wall Street analysts take it as a bad sign for QLogic, which is also without a CFO following Tony Massetti’s resignation last November to become CFO at NCR.
Kaushik Roy of Pacific Growth Equities LLC described Benck as “sharp and pretty engaged. I don’t get the idea that Jeff was incompetent,” Roy said. “There must have been serious disagreements between him and H.K. They’re still searching for a CFO. All these things don’t bode well for the company. It is clear that QLogic is having some serious strategic issues that are extremely hard to overcome.”
Aaron Rakers of Wachovia expressed a similar opinion in a note to clients today.
“We view this as a negative for QLogic,” Rakers wrote, adding that Benck was seen as Desai’s probable successor. “This announcement likely puts increased strain on QLogic’s executive management team, which has been in the process of looking for a CFO.”
Benck’s resignation raises issues regarding QLogic’s future technology direction, as well as the company’s fate. There has been speculation for several years that Cisco would acquire QLogic. Cisco resold QLogic Fibre Channel switches before developing its own fabric switches, the vendors are working together on FCoE, and QLogic has pieces that Cisco lacks for the coming converged network architecture.
But Roy, who was quoted in the Orange County Business Journal story saying he “would not be surprised” if Cisco buys QLogic and Brocade acquires Emulex, said Benck’s departure probably means no deal is imminent. “Why would Jeff leave before the acquisition?” he said. “It would make more sense for him to stick around until after the deal.”