Overland makes snap CEO switch
A change is as good as... well, change is good
Struggling disk and tape protection vendor Overland Storage has suddenly promoted board member and ex-Snap Appliance CEO Eric Kelly to become its new CEO with incumbent Vern LoForti staying on as president.
Kelly arranged and led the purchase of NAS product supplier Snap Appliance from Quantum in 2002 for $10m. He became Snap's president and CEO and the company became the biggest shipper of NAS appliances. He sold it in July, 2004 to Adaptec for an impressive $100.4m, a ten-times return on his original investment. Kelly joined Adaptec and was a VP and general manager of its storage systems business until 2006.
He joined the Overland board early last year and saw an opportunity for Overland to buy the Snap Server business from Adaptec which was struggling, to say the least, having focussed its energies elsewhere. In the event Overland bought it from Adaptec for an amazingly low price of $3.6m, making a loss on Adaptec's original purchase of at least $96.8m. In other words Adaptec lost over 90 per cent on its investment in just four years.
Overland was having its own problems and has been announcing repeated head count cuts and cost-savings as it struggled to get costs and revenues in balance after a near-terminally disasterous series of decisions by previous CEO Christoper Calisi. LoForti came in after Calisi departed and has had a hard time righting the listing Overland ship with its threatened Nasdaq delisting.
A current strategy is to help build complete systems for video surveillance product sellers, and a so-called Solutions Enguneeing Group has very recently been set up inside Overland to pursue this.
Now, before LoForti's job is done, it has been taken away from him and given to Kelly. A CEO change in such circumstances indicates great strain in a company, witness Seagate.
Kelly himself is naturally bullish about this. "I firmly believe that the intrinsic value of Overland is significantly greater than its current market valuation. The combination of the Snap business, with which I am intimately familiar, the existing Overland product portfolio, and the coveted branded sales channel that Overland has built over the past 20 years, is a potent combination which we plan to leverage."
He revealed some details of recent events at Overland. "As a member of a special committee of Overland's Board formed to review the company's operations, I have worked closely with the management team to formulate the restructuring plan that was announced earlier this month."
However, LoForti was in place yesterday on January 27, and confirmed as presenting the company's second quarter results - not expected to be pretty - call on February 5. The company website still lists him as CEO.
So it looks as if the events that took place to remove LoForti's CEO responsibility have only just happened. LoForti said: "It's something that the board has been contemplating for a while. It had to pull the trigger some time."
Incoming CEO Eric Kelly said: "I've been working with the team now for seven weeks and love and breathe the storage industry. It's a lot more fun in the trenches than on the board. Vern and I and the team started clicking and they said we could always use another pair of hands on the deck."
Sales and Marketing VP Ravi Pendekanti said: "This is a strengthening of the entire leadership team." Vern LoForti agreed with both these sentiments indicating that the changeover has been amicable.
What does this mean for the current product portfolio? Eric Kelly said it was too soon to say. A snap response could be that rebalancing towards the disk-end of the product spectrum will accelerate and that volume sales of Snap Appliances through Overland's channel will be pursued vigorously.®