Emulex CFO Rockenbach Steps Down Amid Activists’ Pressure
Emulex Corp. (ELX), the target of activist investors including Elliott Management Corp., said Chief Financial Officer Michael J. Rockenbach will step down on Dec. 31.
Emulex will interview both internal and external candidates to replace him, according to a statement from the Costa Mesa, California-based chipmaker today. Rockenbach, who has been CFO since 1997, will continue in the role in the interim.
The company, whose biggest shareholders include Elliott Management and Starboard Value LP, has hired Goldman Sachs Group Inc. to seek potential buyers, two people familiar with knowledge of the situation said in July. Last week, Starboard said Emulex needs new board members, a new strategy and financial discipline, increasing the pressure on a company that hasn’t reported an annual profit in three years.
The CFO was “at a minimum controversial among investors and a lightning rod for some investors’ frustration,” Glenn Hanus, an analyst at Needham & Co.in New York, said in a note to investors. He rates the shares hold.
Emulex didn’t provide a reason for Rockenbach’s departure.
“This is just another development in the company’s course correction,” said Edward Park, an analyst at Lazard Capital Markets, in a telephone interview. “Shareholders want them to spend less money and generate more earnings,” said Park, who also has a hold rating on the stock.
A standstill agreement that was set to expire today, where Elliott had pledged to refrain from further stock purchases, was extended until October 20, according to a separate filing.
The shares rose 1.5 percent to $8.06 at the close in New York. The stock has advanced 10 percent this year, trailing a 26 percent gain for the Russell 2000 Index.
The company, whose chips help computer servers and networks transfer data, rejected an $11-a-share bid from Broadcom Corp. (BRCM) in 2009.
Elliott held about 9.8 percent of Emulex as of Aug. 9, while Starboard had 7.7 percent as of Sept. 13, according to data compiled by Bloomberg.
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