Bert Whyte

Being the leader of a once proud and successful company during the lowest point in its history is a lonely job, but someone has to do it. It must be especially tough and lonely being the leader of a company that has lingered at the market's bottom while start-up companies are raking in millions, and many (using your ex-employees) are being hailed as visionaries and leaders.

Bert Whyte knows the feeling. As Net.com's president and CEO for the last two years, Whyte's job has been to right the listing ship that was Network Equipment Technologies.

The funny thing is, just as Whyte's and Net.com's two-year struggle to set the sails is just about complete, Whyte suddenly finds himself in good company.

“In a turnaround, you are always struggling, always trying to rejuvenate the company back to its past glory. In this environment a lot of other companies are now trying to do the same thing,” Whyte says.

Now that Net.com is launching two new service creation platforms that it has pinned its hopes on, the telecom economy is bottoming out. And so are the company's earnings.

Results for the fourth quarter in its fiscal year 2001 showed revenue at $28.5 million, compared with $47.1 million for the same period last year. The company posted a net loss of $11.9 million, which was an $8.7 million improvement over last year, despite the loss of revenue. Net.com's yearly revenue went from $225.7 million in fiscal year 2000 to $145.7 million for fiscal 2001, yet its net loss improved from $40.1 million to $19.4 million.

While the year has been challenging, Whyte says, it also has been rewarding. His company is ready to reveal the results of the last 18 months of development.

And it couldn't come at a better time, Whyte says. The economic downturn could be just the break his company needs. And the resulting change in focus by its incumbent carrier customers just might provide timely affirmation of his chosen strategy.

“Last year it was all about bigger, faster, fatter. My investors were saying, ‘Why aren't you building the next optical product?’ It was very tough for us to say we didn't really believe that market would be sustained,” Whyte says. “They had a point last year, but it turns out that what we had been saying was correct.”

What Whyte was saying was, “It's not about bigger, better, fatter. It's about service delivery and building a proper business model for the next-generation network.”

Like many suppliers, Net.com's target market is the one with a promise of long-term stability — the incumbent carrier. “Today, the incumbents are struggling to make a revenue platform out of broadband. You can understand their concern about building networks without knowing how they will make money,” he says.

And while providers shop for solutions that will propel them to the next generation, Whyte works to rebuild a company struggling to overcome a self-induced near-obsolescence and a sudden downswing in its market, which Whyte believes will last about two years.

He says his company has money in the bank with which to ride out the slump, but says many start-ups will struggle. “Today, cash is king,” Whyte says. “And for many people the environment we are in today is completely foreign. I think it must be very tough.”

He should know. While his company still has much to prove, Whyte suddenly feels as if he now has a two-year head start on other companies that will now have to begin the process of reorganization.

One advantage leaders of start-ups have is the ability to create corporate culture from scratch, but now many have lost that advantage. “The only way to really change a culture completely is to shoot everyone and start again,” Whyte says. “Obviously, you can't do that, so over time you have to change them. And some people don't make it.”

Nine hundred people have not made it at Net.com since Whyte took over in June 1999. The company payroll went from 1400 people to 500. Some of the attrition was due to cost cutting as the company managed its declining legacy business. Some was due to the start-ups, now crashing down around them, who lured away talent.

To make his investors feel good again, Whyte needs to seize what he sees as an opportunity to turn his company around.

“I want to create wealth for my shareholders who haven't seen wealth for the last five years,” Whyte says. Whether that wealth comes from the long-term success of its new product line or from making the company a desirable target for acquisition is unclear.

“If someone says they like what we are doing and we want to take it, as long as it creates real wealth for our investors, we're not against that,” Whyte says. “Our first focus is to get the product out and create some excitement in the industry. We have to show we have picked the right product for the right space.”

Then the market will decide. “I think the platform we have built would fit in the large player's portfolio of solutions,” Whyte says.