SSA Announces New Chairman/CEO in a Bid to Stop Its Agony

Event Summary

Languishing enterprise software vendor System Software Associates (SSA--Chicago, IL) named Robert Carpenter as its new Chief Executive and Chairman of the Board. Carpenter succeeds the retiring William Stuek, the former IBM executive put in charge of SSA's turnaround several years ago. While Stuek was able to stabilize the company during his tenure, it has never regained its former industry position. Carpenter comes to SSA from systems integrator Origin B.V. (Eindhoven, the Netherlands), the IT arm of Dutch corporate giant Phillips, where he was president and CEO of Origin America (Murray Hill, New Jersey). While at Origin, Carpenter significantly increased both the company's IT services and outsourcing revenue, turning it into a profitable venture.

Market Impact

Our position is that the timing of this event is long overdue. SSA continues to hemorrhage cash (it posted a 3Q99 loss of $6.7 million - not including restructuring and other charges of $22.8 million) and revenues declined 32% from the same quarter one year ago, making it the company's 7th consecutive negative results quarter. SSA's financial situation deteriorated so much that the company had to change its stock ticker symbol and execute a 1 for 4 reverse stock split (reducing the total number of shares available). Its current market capitalization is only around $40 million, and its balance sheet is in shambles ($65M of negative stock equity).

With that in mind, we find it very difficult to see SSA's resurrection, despite its large customer base and attractive product portfolio. SSA's chance of surviving, in a consolidating market, with new competitors arriving from all directions, declining revenues, and continuing losses, are slim without a substantial cash infusion from a big partner or a potential acquirer.

User Recommendations

Due to their dire financial situation, any organization evaluating SSA should exercise extreme caution, consider existing functionality only, and be able to provide the majority of product support in-house or through a 3rd party.

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