Crossroads Conscripts CEO

Storage router maker promotes COO Rob Sims to top spot. Can he stop the bleeding?

September 19, 2003

2 Min Read
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Storage router maker Crossroads Systems Inc. (Nasdaq: CRDS) today promoted Rob Sims, previously its COO, to president and CEO -- making him the company's third chief executive in less than two years.

Sims replaces Brian R. Smith, Crossroad's founder, who will continue as chairman of the company. Smith had stepped back in as CEO of Crossroads in May 2002 after Crossroads ousted Larry Sanders. Sanders, by the way, went on to head up Sanera Systems Inc. -- before Sanera also gave him the chop earlier this year (see Crossroads Founder Returns as CEO, Sanera Snares CEO, and Sanera Gains $35M, Loses CEO).

Before he joined Crossroads in 1999, Sims managed the manufacturing and product test organizations at Kentek Corp., which at the time was developing high-speed office printers. From 1990 to 1998, Sims worked for Exabyte Corp. (Nasdaq: EXBT) where he last served as manager of manufacturing engineering and quality for high-end tape drives.

Wall Street analysts are skeptical that Sims has the experience to turn the tide for the Austin, Texas, company -- which has never made a profit since its founding in 1994.

"This is an orderly transition... but I'm not exactly sure what to make of it," says Michael Bertz, an analyst with Morgan Keegan & Company Inc. "[Sims] certainly knows their business. But does he have experience running a public company? I don't think so."A Crossroads representative did not return phone calls seeking comment.

The company is pinning its hopes on its ServerAttach products, designed to connect midrange SCSI servers into Fibre Channel networks, and on its OEM relationship with Hewlett-Packard Co. (NYSE: HPQ), says Bertz (see HP Turns at Crossroads).

But financially, Crossroads isn't poised for a dramatic comeback. For its fiscal third quarter ended July 31, 2003, Crossroads reported a net loss of $1.7 million, or $0.07 per share, on revenue of $5.6 million. For the current quarter, Bertz expects the company to post a loss of 5 cents per share on revenues of $7.3 million. "It's really lumpy in the ServerAttach business -- the visibility is not good on that," Bertz says.

So, just the right time to appoint a new CEO, then! Best of luck, Mr. Sims.

Todd Spangler, US Editor, Byte and Switch

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