QLogic Corp. Chief Executive H.K. Desai has handpicked his successor, an IBM Corp. veteran who’s set to learn the ins and outs of the company’s data networking business.
Last week, Jeff Benck took the posts of president and chief operating officer,the latter a first for the Aliso Viejo maker of electronics for data storage networks.
“Our business is becoming extremely complex,” Desai told analysts in a conference call last month. “We decided that we needed to upgrade our management team.”
Benck reports to Desai, who gave up the president’s title and remains as chairman and chief executive. Desai has run QLogic,one of the county’s largest technology companies by market value,since its 1994 spinoff from Costa Mesa’s Emulex Corp.
QLogic, which had a market value of $2.75 billion last week, makes switches and host bus adapters that speed the flow of data on computer networks.
The company has been looking for a No. 2 for about a year and half, Desai said.
Benck most recently oversaw the group that develops IBM’s server and storage products. He had about 1,400 workers under him.
The group specializes in blade servers, which are inserted into a computer room rack to deliver a lot of power and storage in a compact package.
Desai said he first met Benck nearly eight years ago when Big Blue was a QLogic customer.
“We had seen each other in action,” Benck said. “QLogic was a key partner in building our blade product line. Together we had really good business results.”
QLogic had criteria for a successor, according to Desai.
The company’s board was looking for “someone who has large company experience, broad experience in development, who has managed big programs and who understands storage really well,” Desai said. “Another big part was being able to match the culture here.”
QLogic has an open culture where decisions are made as a team, Benck said.
“My first impression is that QLogic is very nimble, they make decisions very quickly,” he said. “Coming from IBM, where it took longer for decisions to transpire because of the size of the organization, it’s refreshing.”
Benck seemed to “click” with the board, Desai said.
“Jeff fit everything. When I put him in front on the board, they all kind of jumped on him,” he said.
Some analysts took the news as evidence of a bigger change to come.
“It still isn’t clear how long H.K. is going to be there,” said analyst Brent Bracelin of Pacific Crest Securities in Portland, Ore. “It sounds like there is no definitive timeline as far as how long he will have an active role in the company.”
On a conference call after the announcement, one analyst even asked about Desai’s health.
“I’m getting old now but I’m very healthy,” Desai told the analyst.
Desai, 61, said last week he doesn’t have any imminent retirement plans.
Even so, the move is part of a gradual changing of the technology guard here.
Former parent company Emulex, which competes with QLogic in host bus adapters, saw its own big change last year as longtime boss Paul Folino stepped back to chairman in favor of handpicked successor Jim McCluney.
Later this year, Dwight Decker plans to step aside to chairman at Newport Beach chipmaker Conexant Systems Inc., which he’s run for nearly all of its life since spinning off from what was Rockwell International Corp. in 1999.
Benck joins a new breed of tech executives here, including Broadcom Corp.’s Scott McGregor, Ingram Micro Inc.’s Greg Spierkel and Gateway Inc.’s Ed Coleman.
For the most part, they’re newcomers to OC who’ve cut their teeth elsewhere or at global operations of their own companies.
His hiring is aimed getting Desai out from under day-to-day demands and to better manage customer ties.
“While I will continue to guide the overall business, having Jeff will provide me the time to focus on QLogic’s long-term strategy,” Desai said.
Benck, 42, will wear many hats.
He’s set to oversee product development, sales, marketing and manufacturing.
With his marketing background, Benck could help steer QLogic’s branding efforts as it refashions itself from a maker of chips and circuit boards to a supplier of more complex networking gear.
Benck is “going to be doing a lot of heavy lifting at QLogic,” according to Bracelin. “Bringing in someone with a strong technology background is certainly going to help.”
In all, Benck spent about 18 years at IBM, working his way up from computer casing design to project management. He helped get IBM half of the blade server market with its BladeCenter line.
He is coming to QLogic at a time of transition.
Shares are down about 20% since the start of the year, when the company posted disappointing results for the December quarter and issued a profit warning for the March quarter.
For the current quarter, analysts are expecting “mixed results,” Bracelin said.
The quarter “is the slowest of the year,that’s kind of baked into our assumptions,” he said.
QLogic expects profits of $30 million to $33 million on sales $140 million to $145 million for the June quarter.
The company expects business to pick up in the second half of the year.
Desai is set to train Benck one on one.
“I still have to guide Jeff and he has to learn the business,” he said. “It will take a few months before he gets up to speed.”
The two said they have a casual and friendly relationship. Their roles aren’t strictly defined, Desai said.
“My style is more like the ‘two in a box’ idea,” Desai said. “He’ll be involved in everything that I am doing.”
For his part, Benck said he’s “in sponge mode” as he picks up the nuances of the business.
