Covisint Replaces CEO After ‘Execution’ Miss; Stock Plunges
DETROIT (WWJ) – A revenue shortfall has resulted in a CEO change at Detroit’s Covisint Corp.
The secure communication and collaboration technology provider, spun out of Compuware Corp. last year, has named former wireless executive Sam Inman as interim CEO.
Covisint announced Thursday that David McGuffie, an executive since Covisint’s founding in 2000, its president since 2008 and CEO since 2012, is no longer with the company.
The announcement came just before a conference call with analysts to discuss preliminary first quarter financial results. Total revenue for the company was projected as being between $24 million and $25.5 million. Revenue from subscriptions was projected at $17 million to $18 million, and services revenue was projected at between $7 million and $7.5 million. The Web site The Street said analysts were expecting revenue of $27.5 million for the quarter.
In the fourth quarter of 2013, the company posted revenue of $24.1 million and a loss of $8.3 million.
Wall Street was disappointed in the numbers. The company’s stock plunged in late trading Thursday, down $2.60 or 25 percent to $7.76.
Covisint’s board chairman is Bob Paul, who is Compuware CEO. In a conference call with stock analysts and journalists, Paul said: “Additional data suggests that the revenue shortfall was primarily due to poor closure rates. It appears that the pipeline has been strong enough to achieve our expected goals, but continued execution issues have required us to take a much more granular look at the operations. we will continue to determine, define and rectify the root causes. Despite the disappointing results this quarter, Covisint remains a valuable asset with an opportunity to achieve significant growth. The company and its people sit at the intersection of profound macro changes that are forcing every enterprise to improve their performance through internet and cloud based collaboration. These trends and Covisint’s ability to secure integrate and simplify business processes in the crowd give me optimism for its future.The bottom line is we simply didn’t execute well enough this quarter. Regardless, we remain committed to doing whatever it takes to meet our growth objectives.”
Paul also said the shortfall doesn’t affect Compuware’s plans to sell the remaining 80 percent of Covisint that it still owns to the benefit of Compuware shareholders.
In response to a question in the call, Covisint CFO Enrico Digirolamo said several deals the company had expected to close in November and December did not close, leading to the shortfall. Paul also said Covisint will also be naming a new senior vice president of sales.
From 2008 to 2011, Inman was president and CEO of Comarco Wireless Technologies Inc., a California-based maker of mobile power and test equipment. Prior to that he was executive chairman of Think Outside; co-CEO and chairman of Viking Components Inc.; CEO and president of Centura Software Corp.; president and COO of Ingram Micro; and president of IBM PC Co., Americas.
A replay of the conference call discussing the preliminary financial results is available by calling (800) 475-6701 in the United States and (320) 365-3844 elsewhere. The replay passcode is 322201.
Covisint provides its secure collaboration software to the automotive, health care and other industries.
More at http://www.covisint.com.