Employers like EMC actually have a good track record in winning this type of lawsuits which became very popular during the telecom boom.
Notice also that the ex-EMCer focused his allegations of revenue recognition improprieties on the Clariion line which went from $98M in 1Q00 to around $240M in 2Q01. The DG acquisition closed in 4Q99 and EMC inherited a Unisys-Clariion relationship that they probably tried to integrate into their separate and long-time relationship with Unisys.
EMC is also trying to develop a reseller channel for Clariion that does not conflict with its direct sales model so there are bound to be many gray areas in accounting. The point is that it doesn't make sense for EMC to fool around with Clariion revenue recognition only since Symmetrix continues to be the flagship product line.
This type of lawsuits seems to proliferate when the start-up funding environment gets hot and heavy, and everybody has IPO bonanzas in their eyes.
Storage networking was widely considered to be one of the last to feel the effects of any spending slowdown and still considered to be one of the first to recover because of the quick ROI characteristics. This was mirrored by the level of VC funding activity (see below).
OCTOBER 16, 2001 Cereva 1 -- Pirus 0
....On October 11, in the Middlesex Superior Court, Cambridge, Mass., a judge ruled in favor of Cereva in its breach of contract suit against Timothy Lieto, its former head of sales and business development, preventing him form working for Pirus.
By taking the job at Pirus, Cereva claims Lieto is breaking the one year no-compete clause in his contract. He still has nine months left on the contract before he can seek employment with a competitor. And this is where it gets complicated, as exactly who competes with whom in this fledgling market isn’t altogether clear yet.
Nevertheless, the judge has enforced the non-compete agreement against Lieto. “He found that Pirus is a competitor of Cereva’s,” says Bruce MacDonald, director of corporate communications at Cereva....
byteandswitch.com
-- The current crop of 60 or so startups has secured funding totaling close to $2 billion. A lot of that money has gone into storage service providers. This market segment has far more startups – 14 – than others, and $542 million worth of venture capital has gone to them. The next most popular sector is next-generation SAN and NAS appliances, with 12 startups.
-- The startups garnering the biggest rounds of funding are developing high-performance storage systems. Four startups in this field have a total of $303 million in funding, an average of more than $75 million apiece.
-- About 60 venture capital companies have already invested in storage startups.
-- Established VCs think that too many startups are getting funded, and a shakeout is inevitable.
byteandswitch.com |
