While Manny Rivelo’s resignation as F5 Networks president and CEO on Monday is still something of a shocker, analysts are comfortable with John McAdam, Rivelo’s predecessor, taking charge of the company temporarily.
Rivelo took the leadership tiller from McAdam in July, but last week he left the company “for matters regarding personal conduct.” Rivelo also stepped down from F5’s board, while McAdam has stayed on the board but is no longer chairman.
“It was very, very surprising,” Gartner analyst Andrew Lerner says of Rivelo’s departure. “There are no details on what specifics led to it, so there’s not a ton you can say about it. It was just a huge surprise.”
While still withholding specifics, F5 did go out of its way to say Rivelo’s departure wasn’t related to operations or financials.
“As for the personal conduct, no idea as to what it could be,” says Dougherty & Company analyst Catharine Trebnick in an email to SDxCentral. “I was on [a call] with investor relations, and they were very complimentary of his work while he was there.”
She says Rivelo’s performance as president and CEO was one of the best kept secrets on Wall Street, despite speculation that the company could be an acquisition target after its shares recently hit a 52-week low.
During F5 Networks’ fourth-quarter earnings call in October, Rivelo was optimistic about the company’s prospects as it looks to expand its applications delivery controller (ADC) into the cloud and extend its security offerings into more markets.
“McAdam has been there for a while, and any time you have a change in leadership you bring in some new ideas and renewed energy,” Lerner says of Rivelo’s tenure. “I don’t think it was necessarily a turnaround, because that would imply that it was going in the wrong direction.”
Rivelo boarded F5 four years ago from Cisco, where he was senior vice president of engineering systems and operations.
While traditional ADC companies, which include Citrix, A10 Networks, and Radware, are faced with increased competition from cloud providers such as Amazon Web Services (AWS), F5 still enjoyed a 50 percent market share, according to Lerner.
“They are a very strong player in the market,” he says. “They come up in every conversation about the market. But the ADC market is undergoing a significant transition with the open source cloud providers that cater to new buyers.”
F5 Networks also lost long time executive Dean Darwin last month. Darwin had been at F5 for 10 years before stepping down as senior vice president of worldwide marketing. In a company blog, Darwin wrote that he was taking a much needed break.
While every large company has a contingency plan in place for unexpected leadership changes, McAdam’s temporary appointment as CEO and president “calmed the waters,” according to Lerner. McAdam joined F5 as president and CEO 15 years ago. During his tenure, F5’s revenue grew to $1.7 billion from $108.6 million.
McAdam’s retirement was short-lived, and now F5 is conducting another search for his replacement. Trebnick says that Wall Street loves McAdam and that he’s committed to staying at the helm for as long as it takes to find a permanent successor. In the meantime, Rivelo’s fingerprints are still on the company.
“F5 is going to stay on the course Manny architected them to,” Trebnick writes in her email.