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BakBone Gets New Head
Software vendor says CEO swap is unrelated to accounting woes of recent months
November 2, 2004
3 Min Read
BakBone Software Inc. (Toronto: BKB) changed CEOs today after a rocky seven-month period for the backup software vendor that included the resignation of KPMG as its independent auditor three weeks ago.
James Johnson replaces Keith Rickard as CEO, a week after the company hired Deloitte & Touche LLP as its new auditor. KPMG quit as BakBones auditor October 12 with no explanation.
BakBone spokeswoman Dani Kenison says the change in CEOs is not connected to the auditor situation or to any other events in a chain that began earlier this year and just seems to keep on going. Here's a recap:
March: BakBone asked stockholders to approve a reverse split in hopes of getting listed on Nasdaq (see BakBone Calls a Reverse). BakBone is traded on the Toronto Exchange, but needs a minimum bid price of $5 per share for a Nasdaq listing. Shareholders approved the reverse split and BakBone has until next May 17 to execute it, but the move hasn’t worked as BakBone hoped. Its stock dropped steadily from $3.73 on the day it requested stockholder approval to $1.12 this afternoon. Analysts say the price would have to reach at least $2 to make a reverse split viable.
May: BakBone said it had to restate earnings as it moves to U.S. GAAP standards from Canadian GAAP. The company adjusted downward revenue from its first three quarters of fiscal 2004 after several large contracts were changed to deferred revenue. Also, the company did not properly take into account deferred stock-based compensation charges when it reconciled from Canadian GAAP to U.S. GAAP for its fiscal 2002 and 2003 (see BakBone Slip Called Temporary and Bakbone Reports Restated).
July: BakBone downgraded its revenue for the quarter that ended in June to approximately $7.8 million. Its previous guidance was $8 million to $8.5 million (see BakBone Announces 1Q Earnings).
August: BakBone reported revenue of $7.9 million for the June quarter for a loss of $1 million -- its second straight losing quarter.
BakBone had given no indication a change in CEOs was in the works. “I was surprised by it,” financial analyst Bradley Mook of Emerging Growth Equities (EGE) says. Still, Mook says he can find no “specific link” between the accounting missteps and the change in CEOs. For one thing, he says, the CFO rather than the CEO usually takes the fall for accounting problems.The inbound Johnson and outbound Rickard knew each other from Sterling Software, where they worked together. Other BakBone VPs Scott Peterson and Ken Hudak are also veterans of Sterling, which is now part of Computer Associates International Inc. (CA) (NYSE: CA). (See BakBone Hires VP.) Johnson spent 15 years at Sterling. His most recent job was CTO of SoftBrands Inc., a privately held enterprise application software company.
BakBone says Rickard resigned to pursue other interests, effective immediately. “Keith stepped out of retirement to join BakBone [in 2001],” Kenison says. “So there was a plan of succession in place.”
Perhaps it's the start of smoother times for the San Diego-based company. After all, a small outfit that competes against giants such as Veritas Software Corp. (Nasdaq: VRTS) and EMC Corp. (NYSE: EMC) and relies on partnerships and channel sales can be harder hit than the big fish by questions about its financials (see BakBone Announces Channel Program and BakBone Signs With NEC).
“I’m sure the events of the past year created circumstances that foster uncertainty,” Mook says. “And any time there’s a CEO transition, there’s uncertainty. They hope he [Johnson] comes in with a clean slate and can put those issues behind them.”
— Dave Raffo, Senior Editor, Byte and Switch0
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