SAN FRANCISCO (Reuters) - ServiceNow Inc NOW.N said it had hired former eBay Inc EBAY.O executive John Donahoe to be chief executive, replacing longtime CEO Frank Slootman starting in April, a surprise move that sent shares of the enterprise software lower on Monday.
Slootman, who will remain chairman of the company after Donahoe takes over, said in an interview that the board underwent a succession planning process two years ago.
Donahoe, who has 30 years of management experience as a former CEO of eBay and Bain Consulting, is the chairman of PayPal Holdings Inc PYPL.O and on the boards at Nike Inc NKE.N and Intel Corp INTC.O.
His appointment comes as ServiceNow, which made its name helping IT departments speed up ticketing requests, has expanded to new areas such as operations management and human resources.
“The opportunity will be to expand beyond just IT and the chief information officer (CIO) into helping partner with the CEO to help them address their greatest needs,” Donahoe said in an interview.
Donahoe said he will bring his experience at a consumer-facing company such an eBay to help create more of a “consumer orientation” at ServiceNow, whose customers are often big corporations, and to boost its public profile.
ServiceNow shares fell 4.2 percent to $87.91 after dropping as low as $86.94 on Monday. The new CEO appointment could be weighing on shares because it lowers the chance of a potential sale of the company in the near term, analysts said.
“We believe Mr. Donahoe’s decision to join ServiceNow, while it may remove near-term M&A speculation, should be viewed quite constructively as the company expands into a mega-software vendor,” Macquarie analyst Sarah Hindlian said in a research note.
The enterprise software industry has been undergoing consolidation, with landmark deals in 2016 such as Oracle Corp ORCL.O buying NetSuite for $9.3 billion and Microsoft Corp's MSFT.O $26.2 billion acquisition of LinkedIn.
ServiceNow is not planning to be part of consolidation, unless it is a buyer of assets, its executives said.
“The fact that the board has appointed John is a really strong statement that we are going to run this company and not view ourselves as a target of the activity,” Slootman said.
Reporting by Liana B. Baker in San Francisco; Editing by Bill Rigby
Our Standards: The Thomson Reuters Trust Principles.