The Good News: ShoreTel is Hiring

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It’s been a rough year at ShoreTel. Before the end of the June the firm lost eight executives in 2013.

  1. Mark Arman, VP of International Sales and Worldwide Distribution, left in February.

  2. Timothy Gaines, Vice President of North America Sales, left in February.

  3. Ava Hahn, VP Corporate Development and General Counsel, left in March.

  4. Joe Vitalone, Vice President of Channels, left in April.

  5. Peter Blackmore, President and CEO, resigned last month, but intends to stay on until a replacement is found.

  6. Dan Hoffman, Founder of M5 and President and General Manager of ShoreTel’s Cloud division, left in June.

  7. Pedro Rump, SVP Engineering and Operations leaves in June.

  8. Kevin Gavin, CMO, resigned in June, presumably leaving in July.

I started getting inquiries a few months ago. There was some speculation that Mitel was to acquire ShoreTel, but I never got any confirmation of that rumor. I find it hard to believe. The market is likely to consolidate, but Mitel and ShoreTel don’t make a lot of sense to me.

At first I didn’t make much of the departures. Turnover is natural and sometimes for various reasons departures get clustered. The company’s recent performance was not shockingly good or bad. I told someone a month ago that I’m not concerned about these resignations as long as Gavin is still there – oops.

This much change can be hard to recover from as a lot of knowledge has walked out the door. First thing is to find a CEO. That typically takes around 6 months – I expect someone will be named in July – maybe as an Acting CEO. Fair or not, most of the blame of these departures will fall on Blackmore, he’s already resigned so needs to be replaced quickly.

The short term doesn’t look great for ShoreTel. It will lose some of its momentum, probably cut-back on advertising, which will reduce sales. Competitors will use FUD tactics to win competitive bids. As sales drop, so will revenue, and subsequently so will the stock price. That could cause more executives to leave, and will also attract firms looking for acquisitions.

The long term isn’t as easily predicted. The company has a loyal customer base, a compelling public cloud offer, and has a certain tenacity about winning. It intends to offer a ShoreTel SIP phone for the cloud and the appliance, and could recover from this dark time.  I’ve made the mistake of dismissing ShoreTel before, so won’t at this juncture.

Dave Michels