Shoretel Implosion?

I have never heard the kind of rumors about a vendor that I am hearing about Shoretel. Reports of unhappiness in the ranks of the workers and management problems persist in the industry.

Some comments I have been hearing is this management team was great for the IPO but can’t run the company day to day. This news may have leaked to analysts and would explain the various downgrades I have been seeing on the wires.

I normally hate to talk about rumors without doing more research than this but in my experience this level of negativity is unusual for any company and for it to come out of the blue and unsolicited from multiple sources means there could likely be fire causing the smoke.

Suffice it to say, I will write more if I hear anything.

  • Proud to Be Wearing Orange
    May 6, 2008 at 7:31 pm

    Rich,
    I am embarassed for you that you would stoop to such low “reporting”. The very rationale that you cite for the “implosion” of ShoreTel is asinine. The employees are “unhappy”, thus the company is soon to meet its demise? How does that make sense? Do you think all the employees at McDOnals are “happy?” Do you think they rave about how wonderful their jobs are? I doubt it, thus by your logic – is McDonalds about to implode?? Now, assume for a moment that there is an unhappy employee base, and I am not saying that there is – how would employee disatisfaction buck the revenue growth trends reported LAST WEEK on ShoreTel’s earnings call and cause an implosion? ShoreTel continues to be profitable, to outpace the industry’s reveue growth and continues to have the highest level of customer satisfaction around. THESE are the facts. This is what a “reporter” should be reporting. These “unhappy” employees are proud of what they do, they are highly successful at it, and are committed to the company.
    Your article is nothing by sensationalist conjecture based in nothing other than rumors. Are you moonlighting for Star Magazine now? I have read your blogs for years but will never do so again. Further, I hope that your advertisers take quick and serious notice at the type of non-news and rumor-mongering that you are now supporting. This type of “reporting” attracts a very different kind of reader – and not the ones that are trying to figure out how to spend their IT budgets. I assume you write this garbage to drive readers to your blog, but advertisers beware – Rich could turn on you at any time.
    And, yes, I am a proud and happy and highly content ShoreTel employee. There are hundreds just like me. Had you taken the time to call any single person that works at our company that would have been quickly and easily verified.
    Now lets see if you are “reporter” enough to print this. Apparently the truth isn’t something you are terribly keen on.

  • Rich Tehrani
    May 6, 2008 at 9:24 pm

    Thank you so much for the comment. This blog and TMCnet for that matter will always be a place where open ideas are shared.
    To date I have received multiple comments saying I am right on track with this post. BTW it is my experience that when a rumor is way off base you get more than just the single anonymous poster with a dissenting point of view.
    Having said that, I have spoken with the company since this post and on the call it was mutually discussed that when a stock price drops dramatically, morale often suffers.
    Other employees are not happy that the stock has dropped from $18 to $5 in six months. They have also complained to me about management issues. To imply morale and stock price/management problems aren’t linked is pretty gutsy.
    But back to your post — My loyalties are to my readers who are generally people who buy and resell communications and technology products and services. Advertisers are great and they spend more money on TMCnet than any other communications and tech site because about 3 million unique visitors frequent TMCnet each month and we have the testicular fortitude to publish both positive and negative perspectives.
    An interesting footnote is that many of the publishers who have our reach and scale are publicly traded or have outside investors who control the company’s actions. TMC is privately held and has been so for 36 years which means we can be loyal to our readers first and shareholders second.
    Now I am not comparing anyone to Enron but a reporter reporting the details of the latest Enron earnings call would have gotten it all wrong. A benefit of doing this job for as long as I have is that I am very connected with many people who know things that aren’t always shared on such calls.
    You mention that my article is sensationalist rumors and I would have to say that glorifying a few lines of copy by calling it an article is flattering. This is a blog entry and as such can be informal and a few points about something interesting worth sharing. The entry speaks for itself. I reported what I heard and stated it was mostly rumors.
    It is worth pointing out I happened to be at an industry trade show last week and after the post I was approached repeatedly with comments that confirm what I said in the post.
    Regarding turning on my advertisers – again, my loyalty has to be to my readers first. Readers are very smart and they see through companies that do nothing but glorify advertisers.
    In the end, advertisers care about readers.
    I wish your company the best of luck. We at TMC will continue to report the honest truth on what we see in the communications and tech space. After all, if this blog entry was about Cisco or Avaya, would you have written me at all?
    Having said all that I will be sure to cover your company again soon to get their perspective on their growth and the market.

  • John
    May 15, 2008 at 12:45 pm

    Any updates on the Shoretel rumors?

  • Shoretel reseller
    June 10, 2008 at 10:43 am

    Something negative is happening at Shoretel, for sure. It does not seem to be public information yet, but seeing things like this reinforce that someone has looked at their books and found something they don’t like:
    http://www.mffais.com/newsarticles/2008-06-06/2537923-89673.html
    Shoretel Inc (SHOR) dumped by Optimum International Fund
    By: SEAN RILEY Approving Editor: DONNA SCOTT
    LONG BEACH (Mffais.com) – Optimum International Fund (Optimum Fund Trust) completely dumped all -81,400 shares they owned of Shoretel Inc (SHOR) as shown by filings made public on 2008-06-06.
    The stock is currently owned by 100 funds/institutions with a total activity score of -0.04. With 46.31 % of owning funds reported recently buying shares, 7.36 % maintaining existing share level and 46.31 % selling shares. Full details for Shoretel Inc (SHOR) available at http://www.mffais.com/shor.html

  • jg
    June 27, 2008 at 10:11 pm

    The ShoreTel product is simply not making the quarter over quarter gains in sales like it used to. The market is really tough.
    There are a lot of competing solutions in the lower market (30-100 seats) like Cisco, Asterisk, Digium, Fonality, AllWorx, and a whole bunch of hosted options. Most have a name recognition or pricing advantage over ShoreTel. It seems that the features that ShoreTel brings to the sub 100 seat market are not really needed by that market or they are easily and quickly being duplicated by these competitors.
    This has caused ShoreTel to swim upstream to the 100-1000 seat market quickly, but many 100+ seat opportunities are also looking at Cisco, Mitel, Nortel and Avaya along with ShoreTel. Based on the vibe I’ve been getting recently from the ShoreTel folks they are desperate for sales, it doesn’t appear that this quarter (their fiscal year end is June 30 2008) was anything spectacular.

  • jg
    June 27, 2008 at 10:16 pm

    The people at ShoreTel are for the most part very glib about their company and product. Let’s put it this way, I don’t get the warm fuzzes from them and I’ve heard the same from other dealers at the various ShoreTel functions. The threats and quotas are really getting old. It make the dealer channel want to say “screw you” to certain ShoreTel employees. They seem to think that those of us in the channel should wash their feet every time they come by our office. It’s really quite a site.
    If I’m told one more time how they are shooting to be a one billion dollar company I’m going to barf. Honestly, it’s all about them. Most of the hacks working within the ShoreTel sales force are former interconnect and data integration industry employees who were promised that their stock options were going to make them millionaires by now. They thought they were going to be the next Cisco! Right!

  • jg
    June 27, 2008 at 10:18 pm

    When the stock crashed in January after they missed their fiscal Q2 numbers, there were these loooong faces and a marked increase in hostility toward the channel. It was like they WANTED to blame the channel. This is what happens when people convince themselves that they are making a market when it’s usually the market that is making them and has to continue to be there for them to be successful. When the market goes south (bad economy, competition, or whatever) the ones who think they have made the market want to blame those who helped them get there and the funny thing is those of us in the channel have more at risk financially than 99% of the employees at ShoreTel. We have more real dollars invested in ShoreTel’s success than almost any of them individually.
    The point is that VoIP is rapidly going main stream and because IP is an open standard, the downward pressure on price in going to be unrelenting for all of us. Cisco used to treat their partners that way and their partners all walked. Now ShoreTel is doing the same thing and their partners are going to walk too!

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