I wasn’t one of those who was enamored of 3Com’s choice of Scott Murray for its CEO, so I don’t think his departure, about eight months after his arrival, is a death blow to the company’s prospects.
Officially, Murray is leaving to find a job that allows him to spend more time with his family. That’s probably true. Murray was traveling regularly to and from China for visits to Huawei-3Com (H3C), the data-networking joint venture with Huawei in which 3Com holds a 51-percent majority interest. It was a lot of business travel, and it involved a lot of time away from his young family in Massachusetts. A good indication that Murray left on his own, and was not pushed out the door, is that he will not collect a severance package. By publicizing that fact, 3Com is intent on precluding speculation about whether somebody other than Murray had a hand in his departure.
Murray will be replaced by Edgar Masri, who filled several 3Com management roles during a previous 15-year tour of duty with the firm. He also served as a general partner with venture-capital firm Matrix Partners, which made the news on this site earlier today with its investment in Digium. Most recently, Masri filled the role of COO at Redline Communications, a broadband-technology firm based in Markham, Ontario.
Masri will take over from Murray on August 18, the same date that 3Com’s new executive vice president of corporate development, Bob Mao, will join the company. Based in China, Mao will focus on managing 3Com’s interests in the H3C joint venture. His last gig was as chief executive of Nortel’s China-based operations from 1997 until earlier this year. Mao will report directly to Masri, who will serve as chairman of the joint venture in addition to ruling the roost at 3Com.
That’s a bit curious, actually. If Mao could come aboard to assist Masri will on-the-spot management of H3C, why couldn’t he have joined the company with Murray at the helm, allowing the jet-lagged CEO to spend more time at home and less time in airports and Chinese boardrooms? Maybe somebody from 3Com will answer that question for us; then again, maybe not.
All things considered, though, the loss of Murray is far from fatal. Murray was a technology lightweight, but reputedly an operational wizard. He would have made a difference in the old 3Com, which had efficiencies to attain and its own products that channel partners and customers actually wanted. Notwithstanding the TippingPoint division of 3Com, which arguably has good technology and a competitive shot at holding its own in the intrusion-prevention market, 3Com is a shell of its former self. It has gone from an enterprise-networking vendor in the 90s to an SMB-networking player a few years ago, with an ill-advised jaunt into the carrier space thrown in for laughs and giggles.
Now 3Com is back again with pretensions to enterprise greatness. Strategic consistency has not been a strong suit for 3Com during the past decade.
But it does have this joint venture with Huawei going for it. That was a smart move, and one that 3Com finally is recognizing as an asset it can’t afford to neglect. Masri and Mao, with their mix of deal-cutting savvy and intimate familiarity with Chinese business culture, are a one-two punch that should fully exploit the H3C opportunity.
3Com’s immediate objective with H3C is to get an ever larger stake of the joint venture, preferably before Huawei begins thinking about whether and how it should approach other potential partners. 3Com will be able to submit a bid to buy some of its partner’s shares as of Nov. 15, but it will want to begin negotiations as soon as possible. There’s no question in my mind that Masri and Mao have a greater probability of emerging from those discussions with a favorable outcome than did Murray.
if the new executive tandem at 3Com can seal a bigger deal with Huawei, 3Com shareholders stand to benefit significantly.
As Bear Stearns analyst Matthew Shimao noted, in an article written by Peter Kang of Forbes:
The inherent value of the H3C story is not diminished by the CEO’s departure. Our thesis on 3Com is primarily based on H3C’s potential. In our view, 3Com is the best way for US investors to play tech growth in China and other emerging markets — where trends remain strong and the joint venture is taking share.
That’s essentially true. H3C is 3Com’s brightest hope.