Isilon Re-Deals Management Pack

Troubled clustered storage maker swaps out CEO, maintains optimistic outlook

October 25, 2007

3 Min Read
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Clustering specialist Isilon has swapped its CEO and changed its CFO in a major management reshuffle.

Isilon also postponed its third-quarter results, which were originally scheduled for tomorrow.

Earlier today, the vendor announced that CEO Steve Goldman had been replaced by Isilon founder and CTO Sujal Patel. The company also confirmed the departure of CFO Stu Fuhlendorf. The firm's controller Bill Richter will serve as interim CFO until a replacement for Fuhlendorf is found.

"The board of directors directed that Isilon needed new leadership -- they believe that we have a great business opportunity, but to fully realize that, we needed change," says Jay Wampold, Isilon's senior director of marketing. "We have built a significant market around clustered storage, [but] we have had some execution issues that have hindered us from maximizing our possibilities."

The last few months have certainly been tough for Isilon, which went public in a blaze of publicity late last year, then failed to keep its momentum going.Despite its promise to reach break even sometime this year, the plan hasn't panned out. After a rocky first quarter, Isilon was also hit by losses in the second quarter, which it attributed to deal slippage and the need to ramp up its sales training.

Earlier this month, the vendor was forced to lower its preliminary third-quarter results, citing weaknesses in its European business and tight wallets at key customer Kodak.

"[This is] an effort by the company to get back on track after several disappointing quarters and delayed profitability post its IPO," wrote Goldman Sachs analyst Laura Conigliaro in a note released this morning, adding that it is too early to predict what changes Isilon's new management will make.

Despite the current upheaval, the analyst believes that Isilon's core technology remains a viable proposition for users. "Isilon's problems have centered more around execution and expectations than around its market or its products, both of which we view as attractive," she wrote.

Isilon's decision to push out its earnings announcement just one day before it was due nonetheless creates an air of uncertainty. "The pressure is likely to build on the company to either fix its internal issues as quickly as possible or seek some other alternatives," wrote Congiliaro.It remains to be seen what these alternatives might be, although Wampold told Byte and Switch that the firm's endgame remains the same.

"We're focused on building a long-term business," he said. "If you look at the first nine months of 2007 and the first nine months of 2006, we grew almost seventy percent year-over-year."

Isilon has already earned itself something of a reputation for controversy in the clustering market, allegedly by trash-talking EMC and NetApp during its IPO roadshow. This prompted an outburst from NetApp CEO Dan Warmenhoven on his firm's analyst day earlier this year.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • EMC Corp. (NYSE: EMC)

  • Goldman Sachs & Co.

  • Isilon Systems Inc. (Nasdaq: ISLN)

  • Network Appliance Inc.

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