Adaptec CEO resigns
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Adaptec's CEO is resigning, and the company is up for sale.
This confirms what many people have thought would happen once Steel Partners' gained control of the board after a proxy battle. Sundi Sundresh, who became Adaptec's CEO in November 2005, then already its president, is leaving on January 4th and will be replaced by interim CEO and president John Quick, who is a managing director for activist investor Steel Partners and an Adaptec board member. Sundaresh has agreed to work as a consultant for Adaptec and assist in the sale process. It looks like an agreed resignation.
Doug Houweling, an independent board member and ex-chair of its Governance and Nominating Committee and a Steel Partners antagonist, has resigned from the board, completing what is effectively a rout of Adaptec's old guard at board and executive level.
Blackstone Advisory Partners has been retained as a financial advisor to assist in the sale of Adaptec, its assets, and operations.
In a piece of Nasdaq bureaucracy Adaptec will schedule its cancelled annual general meeting before the end of March so as to remain compliant with Nasdaq stock exchange rules. Because of that the Nominating Committee will begin a search process for potential directors.
That's the formal stuff over with, let's get on to the nitty gritty. Adaptec is toast. Jared Peters, the newly-appointed world-wide sales VP has been handed a chalice dripping with poison as the board has just sharply increased the doubts customers will have about doing business with a company that's put itself on the block.
The whole sorry Steel Partners saga has fundamentally been about Adaptec's under-performance as a business and its inability to reorganise itself and focus on a viable strategy for the future. The add-value-to-the-adapters strategy is pretty good but it is a pity it took so very long to come about.
Steel Partners came in about a year ago as the kind of investor that scents a weak and failing company with asset values that could be realised. Now, with a recession and maybe-recovery, it has got its stranglehold on Adaptec's assets and has to deliver on its strategy and make a return on its investment. ®
COMMENTS
Unsurprising
It comes as little surprise that Adaptec have fallen on hard times: its products haven't exactly been up to scratch for the past few years they've failed to keep abreast of the competition. Better R&D instead of relying on their brand while they punt any old crap might have saved them, but what's done is done.
That said, it's a sad end to a once good company: with good leadership they might have turned around, but by the sound of it, it'll go the same way as far too many others who've caught the attention of the asset-strippers.
I'd say it was the end of an era, but I think it ended at least five years back in Adaptec's case.
Steel Partners - A Correction
Why did you have to write the last paragraph to describe Steel Partners as the swooping vultures coming in from the kill ? You've written the proper facts before, why put the wrong ones up now ?
Steel Partners have been major investors in Adaptec for nearly FIVE years. When they first invested many saw their focused strategy to realise value out of R&D and a proper sales model as the one way of saving and reviving a former giant of the business.
Sundi and his cronies not only fought them all the way, they spent a lot of time inventing creative ways to make it too expensive for themselves to be fired whilst continuing to rape the company in salary and expenses. During the last 5 years Sundi's strategy of doing whatever was diametrically opposite to what Steel was recommending has seen Adaptec's quarterly revenue drop by over 80% and a conservative estimate is that he's burned through $500M in one failed initiative after another.
A lot of people thought that Sundi's predecessor, Bob Stephens, was a disaster. Sundi has outdone Bob magnificently, or tragically depending on how one looks at it.
The ousting of Sundi by Steel is not something to be lamenting. If the company was to have been saved it should have been done at least 4 years ago. No one who has been involved with Adaptec will be sad to see Sundi go, in fact a lot of ex-employees are celebrating and if a big hole opened up and Sundi fell in they would celebrate harder.
The demise of a once great company like Adaptec is not down to some "money grabbing hedge fund", it's down to nest feathering bad management going back more than a decade. The current actions are merely due to Steel trying to recoup the millions they invested in Adaptec during the years they were denied any say in how the company was run.
I think I still have a few SCSI cards of theirs.
I found them in a box. (Unfortunately, they were not compatible with OpenVMS 8.3 AXP.)
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