Key execs leave Netpliance; mass layoffs expected

In the wake of a failed bid by company management to take Netpliance private, two key executives have left and significant layoffs are expected.

In the wake of a failed bid by company management to take Netpliance private, two key executives have left the troubled Internet appliance maker and significant layoffs are expected to follow.

Chief Operating Officer Valerie Walden and Vice President Kenneth A. Kalinoski, who own roughly 7 percent of the company's shares, have left the Austin, Texas-based company, Netpliance confirmed Thursday. Walden also has served on the company's board of directors, yet it was not immediately clear whether she had resigned her seat.

Substantial layoffs are expected Friday, a source close to the company said. If so, this will be the second round of layoffs since November when Netpliance cut 93 employees, or 38 percent of its work force.

Last week, Netpliance announced that an investment group led by CEO John McHale had pulled an effort to take the company private. The group, which included investors representing more than half of the company's shares, made a bid in December to buy the shares that it did not already own. They offered 65 cents per share.

Although the bid represented a 91 percent premium to the stock's closing price at the time, it was dramatically below Netpliance's 52-week high of $26.12. The bid infuriated investors and prompted at least two shareholder lawsuits.

Netpliance is best known for pioneering the I-opener, a desktop Web-surfing appliance. However, the company has struggled to find a business model that would make money in the nascent and challenging Internet appliance market.

The company currently faces delisting from Nasdaq because its stock price has hovered below $1 for so long.

The company said in Trading on thin iceNovember that it would get out of the business of selling the I-opener itself, instead focusing on helping other Internet service providers sell and manage I-openers and other Internet devices.

Kalinoski declined to comment on why he left the company.

"I'm looking at all sorts of options," Kalinoski said in a brief telephone interview with CNET News.com. Kalinoski owns 7.3 percent of the company, according to a document filed Monday with the Securities and Exchange Commission.

A message left at an Austin phone number listed as belonging to a Valerie Walden was not immediately returned.

McHale and other top executives were not immediately available for comment.

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