Bay calls House to order

Troubled by plunging stock prices and shaken by recent executive departures, Bay Networks (BAY) hopes to have answered criticisms that it has good technology but poor leadership by hiring former Intel top-level executive David House.

"David has proven himself as a world-class leader when he was with Intel. We were looking for someone with strong leadership and David provides this," said Paul Severino, who has now stepped down as company chairman and acting CEO. Severino will continue as a director.

House, former senior vice president of Intel's enterprise server group, will serve as chairman, chief executive, and president. He replaces CEO Andy Ludwick, who resigned two weeks ago.

"He has all three titles, so there's no question that he's leading the company," Severino told CNET.

The question of who's captaining the ship has been an issue at Bay Networks, which develops and markets routers, hubs, and switching equipment.

News Analysis Bay Networks' failed expectations Go to story.

The company was born out of a merger two years ago between SynOptics Communications of Santa Clara, California, and Wellfleet Communications in Boston. Ludwick, who came from SynOptics, and Severino, who headed up Wellfleet, created a company that lacked a clear sense of who was in charge and a clear vision of what it should become, analysts have said.

But Bay Networks has now placated at least some of these same analysts with its selection of an outsider to guide the company.

"The reason the merger wasn't smooth was because you had executives from both companies and they were carrying baggage," said Mark D'Annolfo, an analyst with Adams Harkness & Hill. "An outsider can look at things with a fresh eye and be willing to take the hard stand and lower the boom if needed."

This particular outsider said today that it will take some time to learn the need of the company, its employees, and customers. House noted that although his background is in the server business, not networking, he believes his management skills were serve him well at Bay.

"I have the right base of experience with computers and a customer-oriented background. I have experience growing a company," said House, who early in his career served as general manager of Intel's microcomputer components group. That group's revenue grew to $4 billion from $40 million during his 11-year tenure from 1978 to 1991.

House served as senior vice president of corporate strategy at Intel, where he represented the chip maker to key customers and Wall Street. He also helped negotiate a key deal with IBM to use the Intel architecture for its first PC, and brokered the agreement with Hewlett-Packard in 1994 to jointly develop a 64-bit architecture. In addition, House took part in leading the "Intel Inside" campaign.

When asked about his vision for Bay Networks, House said only that it will evolve with time and deferred to Severino. The former chairman said the company's goal is to make Bay Networks the number-one or number-two choice on customers' lists.

But Esmeralda Silva, an analyst with International Data Corporation and a long-time Bay observer, believes that House does have the vision to make Bay's goals a reality.

"He's done interesting marketing things at Intel like their 'Intel Inside' campaign," she said. "It was a brilliant campaign, and given that Bay has not done a good job marketing its products, he's a strong candidate to resolve the problems they've had selling through their indirect and direct channels."

Bay Networks has also been plagued with slow delivery of new products, but analysts believe that House will put an end to these kind of problems.

"He's worked for Andy Grove for 22 years, and Andy is not one of the easiest people to work with. He does not tolerate stumbles and the fact that House had been there that long speaks well for him," D'Annolfo said.