Progress Software says CEO resigns, warns on revenue
(Reuters) - Progress Software Corp's CEO Jay Bhatt resigned within a year of his appointment, marking another executive departure at the software maker that has been restructuring its businesses and cutting jobs as sales growth slows.
Shares of the company, which helps firms deploy application software, fell 13 percent to $18.70 in morning trade.
The company warned of a drop in revenue in the current quarter, citing Bhatt's departure, and said it could not reaffirm its revenue outlook for the quarter.
Progress in September forecast revenue growth of 1 percent to minus 2 percent for the fourth quarter ending November.
"I think they are using the CEO departure as an excuse to back away from their guidance, and the CEO had lowered that guidance just a few weeks ago," Mizuho Securities USA analyst Gabriel Lowy said.
Bhatt joined Progress last December after Richard Reidy, the company's CEO for two years, stepped down. Earlier this year, Chief Financial Officer Charles Wagner left the company.
"My suspicion is that there is something else going on within the company," Benchmark Co analyst Mark Schappel told Reuters.
"I don't believe he is being let go because may be the quarter isn't playing out as well as planned or they were not able to reaffirm their guidance."
The company said in April it would sell 10 non-core product lines and cut about 10 to 15 percent of its workforce. More layoffs are expected and analysts believe the CEO's departure could derail the company's restructuring plans.
"The company is likely to have a difficult time recruiting someone. Once they do, we can expect another strategic plan. So there's a good chance this company will be facing disruption for up to another year," Mizuho Securities' Lowy said.
The company, which has a market value of $1.36 billion, also said it would be unable to complete its planned $150 million in share buybacks by the end of this year.
Progress said it was "actively considering alternatives" to complete returning at least $350 million to shareholders by the end of 2013.
Progress Software said it has started the search for a new CEO and has retained an executive search firm for the purpose.
A company representative declined to comment.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Sreejiraj Eluvangal and Saumyadeb Chakrabarty)