Jay Bhatt will step down as president and CEO of Progress Software on Dec. 7, the company said Monday, as the struggling software company continues its efforts to turn itself around.
Bhatt is leaving "to pursue another leadership opportunity," the company said in a statement. Bhatt himself is quoted in the statement as saying he is leaving "to pursue another opportunity as the CEO of a privately held corporation in another segment of the software industry."
Progress, based in Bedford, Mass., also said in a statement that it "may experience some slippage in revenue growth in the fiscal fourth quarter of 2012," and it is not re-affirming the guidance it issued earlier for the quarterly results. But, the company anticipates it will achieve operating margins of 25 percent for its core businesses in the quarter.
[Related: Progress Software To Divest 10 Product Lines, Cut Workforce By 10-15 Percent]
The company also said that while it remains committed to returning "at least $350 million to shareholders over time," it will be unable to complete a planned $150 million in stock repurchases by the end of fiscal 2012.
Earlier this year, Progress unveiled a plan to lay off between 10 and 15 percent of its global workforce in an effort to cut expenses and divest itself of 10 product lines to focus on its core application development and deployment software.
Just last week, Progress said it had struck a deal to sell its Shadow middleware, software used for integrating mainframe applications and data with other IT systems, to Waltham, Mass.-based Rocket Software.
Late last month, Progress reported that net income for its third fiscal quarter, ended Aug. 31, plunged 36 percent to $5.8 million from $9.1 million in the same period last year. Revenue dropped 14 percent to $107.2 million from $124.5 million -- including a 6 percent decline, in constant currency, in the vendor's core businesses.
Despite the continuing declines in sales and earnings and Bhatt's impending departure, the company said it was following its plan to return to growth.
"The board believes that Progress is on the right path and is committed to continuing to execute on the company’s strategic plan to increase growth, profitability and shareholder value," said Phil Pead, executive chairman of the board of directors, in a statement.
"Progress has actively implemented cost reduction initiatives and has substantially completed the reduction of our budgeted 2012 expense run rate by approximately $55 million gross value, with the net reduction of $40 million after reinvesting $15 million back into the core segment," Pead said. "In addition, we continue to make progress on our plan to divest 10 non-core product lines, which we expect to complete on schedule. Progress is improving its core business and has a strong and experienced management team, as well as an outstanding group of talented and dedicated employees in place, to help drive the company's strategy forward."
The company's board of directors has begun searching for Bhatt's replacement and has hired an executive search firm to identify candidates for the job. "The Board will conduct a comprehensive search to identify the best candidate to serve as Progress' next CEO," Pead said. "Effective immediately, I will take a very active operational role in the company as executive chairman, alongside Jay. I am looking forward to working closely with the senior management team, which remains committed to executing our strategic plan."
PUBLISHED OCT. 8, 2012
