Posted on August 8, 2007 by steven

Brocade’s former CEO is going to jail, he focused on personal short term profits, and not long term company value. And he is going to pay the price for it.

I put together some random thoughts on this issue below.

I guess they found one of the witches NetApp’s CEO was talking about here ...

“I think it’s become a witch hunt. I think the government is looking to find some egregious examples [of wrongdoing] and to publicly hang people for them. That’s fine. But where does it stop? I’m not saying the past practices were all good. But I thought the SEC’s role was to build investor confidence. What they’re doing right now is destroying it, and I don’t see the purpose.”

In Silicon Valley the worry is what will happen to the NHL Sharks.
“Reyes conviction could threaten Sharks’ ties
By David Pollak
Mercury News
Article Launched: 08/07/2007 07:24:21 PM PDT
Greg Reyes’s conviction Tuesday could end his role as a major investor with the ownership group that operates the Sharks.

“There is no hard and fast rule on the `felon’ issue, but it would likely disqualify him,” said Frank Brown, NHL vice-president for media relations, in an e-mail response when the issue was raised during the course of the trial.”

The Storage consumers of the world may be interested in other aspects of this, and how it affects companies that are represented in their data centers….

From the San Jose Mercury –

“The defense has repeatedly argued that the practice of back dating was widespread in Silicon Valley and hundreds of companies had misunderstood complex accounting rules.

“These stock options back dating issues are not that complicated,” said Schools. “These cases, although they sound complex and they sound difficult to understand, come down to pretty basic principles.”

Another take from Robin Harris –
“This has no impact on the Brocade of today, other than their culture is a direct descendent of the company that Mr. Reyes built. Like EMC, Brocade was a sales-focused culture with a “whatever it takes” mentality. They achieved fast growth for a time but are floundering because they handed their future over to storage OEMs who could care less if Brocade lives or dies. Their strategy is in worse disarray than EMC’s while their core fibre channel business is starting to decline.

I hope they can turn it around, but I’m more than dubious. Most of the world doesn’t need fibre channel and there are better places to buy Ethernet and Infiniband.”


IMHO – When any company’s executive staff is focused on short term personal gain rather then long term shareholder and customer value decisions are going to be made that attempt to lock in customers to a proprietary technology. When dealing with this type of company customers need to understand what the objectives of the executive and majority shareholders are. Investing in technology that will not be supported for the long strategic term will eventually cost customers more money after they are forced to upgrade.

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