Brocade Switches CEOs, Restates

The board of directors of Brocade Communications Systems Inc. (Nasdaq: BRCD) has appointed Michael Klayko as CEO. Greg Reyes has been reassigned to a board post and will act as a consultant (see Brocade Names CEO, Completes Audit).

"It is with mixed emotion today that I announce my passing of the baton as Brocades chairman and CEO," Reyes told analysts on a conference call late today. "It's now time for me to transition into a new role in the company." Reyes has been at Brocade for six years.

Klayko is the former CEO of Rhapsody Networks, which Brocade purchased for $175 million early in 2003 (see Brocade Scoops Up Rhapsody and Brocade Completes Rhapsody Buy). He took over as VP of worldwide sales in the wake of the merger of OEM and end-user/channel sales after the VP of sales jumped ship last June (see Maranti Lands Brocade VP).

"I'm honored that the board of directors has... trusted me to lead the company in its next phase," Klayko said.

When asked, Klayko said no one will be replacing him as head of sales for the foreseeable future.Reyes, formerly board chairman, apparently won't have that job, either. Dave House, a veteran of tech companies such as Intel Corp. (Nasdaq: INTC) and Nortel Networks Ltd. (NYSE/Toronto: NT), will become executive board chairman.

Brocade also announced the findings of a previously announced internal audit that focused on stock compensation procedures (see Brocade to Restate ). The upshot: Brocade says the restatements won't affect "historical revenues, cash positions, or non-stock option related operating expenses."

The CEO switch is the latest in a long line of executive upheavals at Brocade, many instituted by Reyes's team. It's not clear how much the audit results may have affected the board's decision. "Greg has been a key contributor and has a significant and important role as advisor focused on customers and strategic matters," House said when asked point blank whether the Reyes move was a result of the audit.

Asked whether he'd join another company, Reyes was droll: "I didn't know there was another company. I'm pretty pumped about my new role."

— Mary Jander, Site Editor, Byte and Switch0