Cabletron's Benson resigns

Cabletron Systems announced on Friday that Craig Benson, its embattled chairman, president and CEO, has resigned from the company he co-founded in a New England garage almost 20 years ago.

Benson has been replaced by Piyush Patel, Cabletron's senior vice president of worldwide engineering, and former CEO of Yago Systems, a router start-up Cabletron acquired last year. Benson will remain on Cabletron's board of directors.

Benson co-founded Cabletron in 1983 with the eccentric Robert Levine, who stepped down as Cabletron chairman in 1997. Benson and Levine grew the company to $US1.4 billion in annual sales, but it has been stuck at that figure for the past few years. Benson said he was ready to hand the reins to someone "who can lead the company into the new millennium.

"I rejoined Cabletron in 1998 to bring focus to the company, positioning us for continued leadership in the enterprise and service provider markets," Benson said, referring to the tumultuous period in which he deposed then-CEO Donald Reed after Reed had only been on the job for about a year. "Now that we've met this objective, I believe that it is time for me to step aside and turn the reins over to someone who can lead the company into the new millennium. Piyush Patel is that person. He brings demonstrated technology leadership from Yago, a customer focus and a West Coast entrepreneurial spirit. These qualities are all vital to Cabletron's future success and growth."

After losing market share to Cisco in the enterprise, and several lacklustre and money-losing quarters, Benson fell into disfavour with Wall Street. Though Cabletron won industry accolades for its bulletproof technology, Benson was criticised for lacking a coherent plan for company growth, including regaining enterprise market share and addressing hot new growth markets such as service providers and small and mid-size businesses.

Late last year, many Cabletron watchers were calling for a change of leadership at the company, either through Benson's resignation or sale of the company. Benson resisted both.

Analysts looked favourably upon Friday's events.

"I think overall it's good," says Craig Johnson, principal at the PITA Group in Portland, Ore. "I think the question now becomes, does this mean that they're getting set up to sell the company? Without a strategic partner, what is it that they're actually going to try and do?"

Patel said his goal is to "expand Cabletron's leadership in the enterprise and aggressively expand our efforts in hot new growth markets, including service providers and the market for converged voice, video and data networking solutions.

"I share Craig's passion for the customer and will continue the growth initiatives we outlined under Project Ignition," he continued. "Cabletron has all the ingredients for future success, including an extremely loyal customer base, talented employees and award-winning technologies."

Project Ignition is a plan Cabletron presented in March to streamline company operations, reduce costs and stimulate revenue growth. As part of the plan, Cabletron outsourced its manufacturing operations to Celestica, a Canadian electronics company.