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Fore execs flee in wake of GEC reorganization

Fore Systems' chief executive and other key executives resign in the wake of a reorganization by their parent company Marconi, formerly British conglomerate GEC.

Several key Fore Systems executives resigned today as parent company Marconi, a British conglomerate, announced a reorganization to create a new communications unit.

Marconi, formerly Britain's General Electric Company (GEC), said it will reorganize its management team and form Marconi Communications, a $5 billion communications division created by GEC's acquisitions of Reltec, a fiber-optics company, and Fore Systems, a networking equipment firm.

Today Fore Systems chief executive Tom Gill indicated he will leave the company to "pursue other interests," the company said. And, according to sources and analysts familiar with the company, there is a much larger exodus underway.

Fore Systems' chief financial officer Bruce Haney and senior vice president of business development Bob Musselwhite also resigned today, according to a source.

In the merger deal, GEC gained Fore's high-end Internet switching technology, based primarily on asynchronous transfer mode (ATM), analysts said.

Fore has lost about 30 percent of its workforce--at one time 2,000 employees strong--since the merger in April, according to people familiar with the company. Several key engineers and marketing executives also have stepped down, they said.

Culture clash
"This is a textbook case in how not to do an acquisition. It's a very classic case of culture clash. The English don't understand Silicon Valley, and Fore was a lot closer to Silicon Valley than London," said Joe Skorupa, a former Fore employee who is now an analyst at RHK, a communications industry market research and consulting firm.

Recently renamed Marconi, the former GEC specializes in systems integration in Europe. It manufactures electronic and medical products, as well as equipment for the aerospace and defense industry. GEC could not be reached for comment.

In addition, many employees decided to leave after Marconi granted them accelerated stock vesting, essentially a "cashing out" of many workers, Skorupa said. The company reportedly offered new stock options to executives and directors while talks with GEC were still ongoing.

"Now you have a bunch of young, independent engineers sitting on a ton of money," Skorupa said, noting many engineers are forming new start-ups, and several have been recruited by former rival Cisco Systems.