NetApp announced a changing of the guard at CEO and chairman of the board after the market close today, less than two weeks after another disappointing earnings report.
CEO Tom Georgens departed after nearly 10 years at NetApp, and George Kurian, the company’s vice president of product operations, has replaced him. Kurian joined NetApp in 2011 and, since September 2013, has overseen the strategy and development of the company’s product portfolio. Kurian was also appointed to the board of directors.
NetApp also said Mike Nevens, lead independent director, was elected chairman of the board to replace Georgens, who held the position since April 2014. Nevens has served on NetApp’s board since December 2009. He is a senior advisor to Permira, an internal private equity fund, and he also serves on the boards of directors of Altera Corp. and Ciena Corp., according to NetApp’s Web site. Nevens is a retired director (senior partner) of McKinsey & Co., where he led the company’s global technology practice.
“While we intend to conduct a CEO search, we have the utmost confidence in George’s ability to lead the company, given his deep knowledge of NetApp and support from a strong executive team,” Nevens said via a prepared statement. “George has deep relationships with customers and partners globally and is committed to strengthening those relationships going forward.”
A NetApp spokesperson added, “The board believes that conducting a search is the appropriate course of action. George is the lead internal candidate for this position. He was part of our CEO succession plan and brings a wealth of experience to the role.”
Kurian’s appointment comes at a time of slumping earnings for NetApp and several other major storage vendors. NetApp announced on May 20 that its $1.54 billion in quarterly net revenue and $6.12 billion in annual revenue for the 2015 fiscal year were down on a year-over-year basis. The company also confirmed through an SEC filing plans to cut about 500 employees.
One of NetApp’s main troubles has been getting customers to move to its latest Clustered Data OnTap operating system. Many of the company’s largest customers waited for feature parity with the legacy version of Data OnTap, and that didn’t happen until the late 2014 release of clustered Data OnTap 8.3, Georgens noted during NetApp’s May 20 earnings call.
Georgens said the company underestimated the disruption the transition to Clustered OnTap had on the direct and indirect pipeline. He noted that Clustered OnTap represents a “re-architected and modernized version” of OnTap, and large customers have to undertake complex planning to update their existing storage management processes and migrate their data.
Channel partners typically guide smaller customers through the upgrade process, and some partners that were not well versed in selling Clustered Data OnTap saw customers defer upgrades, according to Georgens. Plus, the drive to Clustered Data OnTap hurt NetApp’s ability to attract new customers, he said.
NetApp also has been slow with the release of its all-flash FlashRay appliance. The company instead has relied on all-flash and hybrid version of its EF Series and FAS arrays to compete in the hot flash market. But, Georgens has claimed the company has sold significant amounts of flash through those products.
NetApp’s stock price plummeted during the first five months of this year from $41.68 per share at the close of business on January 1 to $33.16 at the close of business today.
Kurian said via a prepared statement that he is “honored to lead NetApp during this time of transition.” He cited key investment areas of “accelerating Clustered Data OnTap adoption, regaining traction in the channel, and increasing our sales capacity.”
Prior to serving as NetApp’s executive VP of product operations, Kurian served as senior vice president of the Data OnTap group and oversaw the product roadmap and engineering execution of Data OnTap and the associated On Command storage management product portfolio. Before that, Kurian served as senior vice president of NetApp’s storage solutions group.
Kurian came to NetApp from Cisco, where he was vice president and general manager of the application networking and switching technology group. He was responsible for modular campus LAN switching and WAN application delivery. He also previously worked on Cisco’s product development to enable Ethernet-based converged networks for video, voice and data.
Kurian’s prior employers also include Akamai Technologies, McKinsey & Co. and Oracle Corp. He holds a Bachelor of Science degree in electrical engineering from Princeton and an MBA from Stanford.
Georgens joined NetApp in October 2005 as executive vice president and general manager of enterprise storage systems. He was promoted to executive vice president of product operations in January 2007. Georgens succeeded Dan Warmenhoven as CEO in August 2009 and as chairman of the board in April 2014.