McData Cuts & Shuffles

CFO and SVP of engineering on way out now that CNT is integrated

June 24, 2005

2 Min Read
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McData Corp. (Nasdaq: MCDTA) CEO John Kelley today announced a shuffled executive team in the wake of the switch makers $235 million acquisition of rival Computer Network Technology Corp. (CNT). (See McData Bags CNT for $235M.)

Kelley said CFO Ernie Sampias and SVP of engineering Jean Becker are resigning, and he will add a Chief Operating Officer (COO). McData treasurer Scott Berman will replace Sampias. Kelley did not name a replacement for Becker or a new COO.

Sampias will leave the company Aug. 2, and Becker will stay until September. Sampias has been McData’s CFO since May 2002, and Becker assumed her current post in December 2002 (see McData Replaces CFO and McData Hires VP of Engineering).

Kelley announced the changes on a conference call to discuss plans to integrate CNT into McData. The sale was announced in January, and shareholders for both companies approved the deal May 24 (see McData Completes CNT Acquisition and CNT Shareholders Approve Acquisition ).

“Change is never easy, but it is an inevitable part of any company,” Kelley said.Kelley also said McData will transfer CNT’s Lumberton, N.J., manufacturing operations, assets, and employees to Solectron Corp. (NYSE: SLR). Solectron, which already manufactures McData Spherion and Eclipse switches, will manufacture all former CNT-branded products retained by McData.

Kelley said 123 employees are involved in the Solectron deal, and McData is ahead of schedule of achieving 70 percent of its target headcount reduction by July 31. He did not say how many employees have been let go, but in May he said he expected to reduce headcount from around 2,100 to around 1,500 or 1,600 by the end of the year (see RIP: CNT UMD).

Despite cutting staff across all departments, Kelly said "overall employee morale is better than it has been in some time."

On the product front, Kelley said:

  • He doesn’t expect EMC to fully qualify McData’s i10K Director until the third quarter, although EMC is shipping units under a “limited GA.” Hitachi Data Systems (HDS) and IBM Corp. (NYSE: IBM) have qualified the i10K.Kelley said EMC was merely being “thorough” in its testing, and there are no major problems. “Personally I’m disappointed,” he said. “We’re trying to push it through.”

  • Despite “minor glitches” detected in testing, he expects McData’s 4 Gbyte Spherion switches to ship in the third quarter.

    Sampias gave guidance for this quarter of $158 million to $165 million and earnings per share (EPS) of $0.00 to $0.02. For the same quarter last year, McData had revenue of $98.2 million and $0.02 EPS.

    McData’s guidance for the year calls for revenue of $800 million to $825 million and EPS of $0.35 to $0.40. That’s a significant rise from its 2004 revenue of $399.8 million and $0.13, reflecting additional revenue from CNT products and services.

    — Dave Raffo, Senior Editor, Byte and Switch

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