Brocade’s ex-CEO nailed for fraud
Found guilty on all 10 counts
Greg Reyes, former CEO of Brocade, was convicted today of all 10 counts he was charged with of criminal securities fraud for backdating stock options and lying about it in a San Francisco courtroom. He faces 20 years in prison.
Mr. Reyes made some $380 million dollars off Brocade during the dot com boom. What investors didn’t know is that if he had followed the proper accounting rules Brocade’s $67 million FY2000 profit would have been a $950 million loss, at least on paper. Options are a non-cash expense, but so are a lot of other things that show up on income statements.
None of the backdated options went to Mr. Reyes
His defense claimed that he was a sales guy and didn’t understand accounting enough to know that backdating options and falsifying board minutes was a no-no. But the “everyone was doing what I didn’t understand” defense failed to persuade the jury.
As I noted last July
I’m no lawyer, but given that Mr. Reyes sold $380 million of Brocade stock while investors believed the company was profitable, maybe the hope of “enrichment” clouded the man’s judgment.
Evidently a similar thought occurred to the jury.
The StorageMojo take
This has no impact on the Brocade of today, other than their culture is a direct descendent of the company that Mr. Reyes built. Like EMC, Brocade was a sales-focused culture with a “whatever it takes” mentality. They achieved fast growth for a time but are floundering because they handed their future over to storage OEMs who could care less if Brocade lives or dies. Their strategy is in worse disarray than EMC’s while their core fibre channel business is starting to decline.
I hope they can turn it around, but I’m more than dubious. Most of the world doesn’t need fibre channel and there are better places to buy Ethernet and Infiniband.
Comments welcome, as always. If Brocade is stronger than I know, please elucidate.
on August 8th, 2007 at 7:28 am
I’ve been following your blog for a while, and you seem to have a deep passion for Infiniband. You also seem to predict the death of Fiber Channel pretty frequently.
Why?
I’ve done some googling around, and there seem to be few articles which compare the two technologies, and those are from 2000 or 2001. I’d love to see a discussion of where how you see ‘the plumbing’ shaking out over the next few years.
Disclaimer: I’m a sysadmin. Until pretty recently, I’ve focused on systems, not SANs. So I’m really coming up to speed on this stuff, but I still have a long way to go.
It seems to me that the deal killer for Infiniband is the distance limitations. In a data center of any size, 17-20m is nothing. The flexibility of 4gbs FC speeds, over 100 and 200m lengths seems to outweigh the very low latency, and higher throughput that Infiniband offers.
Granted, you can do a slower, longer distance version of Infiniband.
To my mind, this seems to doom Infiniband to be a really nice solution for clusters, or for systems that share a rack (or adjacent racks), and have very high IO requirements. However, for a general ‘plumbing’ solution for systems to reach their storage, it doesn’t seem to offer the flexibility needed.
on August 8th, 2007 at 12:14 pm
RE: “Granted, you can do a slower, longer distance version of Infiniband”
In case you haven’t seen it, take a look Craig Prescott’s comment at:
http://storagemojo.com/2007/07/25/long-haul-infiniband/
and Craig being quoted in an Obsidian article:
Obsidian Longbow Delivers InfiniBand Storage
Interesting Strategy and some really good numbers in that article.
If you have deep pockets, and need the HPC performance numbers, the long-haul IB is the way to go.
As you mention, there is a “poor-boy” Strategy that can deliver IB cost-justification performance numbers.