Sources suggest Newbridge Networks and Northern Telecom (Nortel) are the latest companies to be considering bidding for Shiva, as the beleaguered company appointed a new president and chief operating officer.
James Zucco joined as president and COO from Lucent Technologies and will also replace chief executive Frank Ingari next year, although Ingari will remain as chairman. But a source close to Shiva claimed Ingari survived two boardroom attempts to oust him before Zucco was bought in. "Newbridge Networks has been looking at Shiva lately," he said. "But it thinks Shiva?s overpriced."
Ingari claimed Shiva can survive. "People ask me: Can we stand alone? We were valued at $3 billion a few years ago and now our [market] capitalisation is about $150 million," he admitted. "We have our relationship with a $14 billion partner [Nortel] and plenty of cash." He said Shiva has around $103 million in cash reserves.
Another said Nortel may buy Shiva to guarantee the companies? close relationship. "They can afford it and they already have a mutually exclusive relationship where Nortel provides funding for Shiva?s service provider group in north America." Ingari said that he hopes to expand that deal to cover Europe within a few months.
Before Lucent, Zucco was responsible for the Friends and Family telephone discount scheme that significantly boosted US carrier MCI's fortunes, and has also worked for AT&T . At Lucent he was president of network communications software. Ingari claimed he plans to stay on as chairman, working on company strategy, but admitted: "I have a compensation plan, if they fire me."
Shiva?s share price has plummeted since last summer. Ingari blamed the company?s current plight on channel inventory and redundant technology. "Historically, we have assumed in Europe that sell-in [to distributors] meant sell-though as they never held stock. Now they do." As a result, Shiva took an enormous $6.7 million first quarter charge for price-protecting channel stock, along with a huge inventory write-down because it held V34 modems when the industry began moving to 56Kbps technology. The company is still looking for a sales vice president and a chief financial officer.
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