The board of directors for Pomeroy IT Solutions said Wednesday that it's sticking with its CEO and strategy after one of its major shareholders asked for dramatic changes to the Hebron, Ky.-based solution provider.
Last week, Flagg Street Capital, which owns 1.2 million shares, or 10 percent, of Pomeroy IT Solutions, asked for three seats on the company's board and the removal of CEO Stephen Pomeroy.
On Wednesday morning, the board responded that it believes the company has momentum, the right strategic plan and the right executive team in place now.
"We take the concerns of our stockholders seriously, and the issues raised by this investor are no exception, Kenneth Waters, Pomeroy IT Solutions' lead independent director on the board, said in a statement. "While we respect this investor's right to bring forward recommendations, we will continue to represent the best interests of all stockholders."
Pomeroy IT Solutions executives and members of the board have talked with Flagg Street Capital and offered to provide further information under a standard confidentiality agreement approved by the Securities and Exchange Commission. The offer hasn't been accepted, according to the solution provider.
Flagg Street Capital wrote a letter to the board on April 3 that said it has "lost faith" in Stephen Pomeroy's ability to lead the company and that the company had performed poorly financially while competitors had been more successful.
On March 20, Pomeroy IT Solutions announced revenue of $631.6 million for the 2007 fiscal year ended Jan. 5. The company reported fiscal 2006 sales of $714.7 million, which was down from its $742.3 million for fiscal fiscal 2005.
The company's services revenue has increased in each of the last two years, totaling $258.4 million in fiscal 2007, up from $231.3 million in 2006. Its product revenue fell to $373.2 million in 2007 from $483.4 million in 2006.
Pomeroy IT Solutions posted earnings of $1.1 million, or 9 cents per share, in fiscal 2007, compared with a $10.7 million loss, or 85 cents per share, in fiscal 2006.
Stephen Pomeroy said last month he expected revenue growth of 3 percent to 7 percent for the current fiscal year and earnings per share of 60 cents to 70 cents.
Pomeroy IT Solutions shares on Tuesday closed at $9.27, their highest level since March 22, 2006, when they closed at $10.25.
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