Former SAP America Chief Takes New Finance Job

FRAMINGHAM (07/17/2000) - Kevin McKay, the top executive at SAP AG's U.S. subsidiary until he resigned from that job three months ago, today surfaced as the No. 2 guy at Mercator Software Inc., one of the many vendors jockeying for position in the market for integration tools that can be used to tie together different applications.

Mercator, a Wilton, Conn.-based company that had sales of $98.6 million last year, announced that McKay is joining as executive vice president and chief financial officer. McKay, who gave up the CEO spot at SAP America Inc. in April rather than accept an offer to become chief financial officer of SAP as a whole, is scheduled to start full time at Mercator next month.

McKay headed the finance department at SAP America, in Newtowne Square, Pa., before becoming its CEO. But why he decided to take the chief financial officer's job at Mercator after having been the head honcho at the U.S. unit of SAP -- which is the leading vendor of enterprise resource planning applications -- is open for debate.

Part of the reason may be McKay's background and personality, said Jim Shepherd, an analyst at AMR Research Inc. in Boston.

"By nature, he's a CFO," Shepherd said. "And he'll never be a charismatic leader. He's tough and very smart. [But] although he did a very good job at SAP America, the sales force didn't like him very much because he's tough. He's not a guy you'd choose to run a sales organization."

Dan Sholler, an analyst at Meta Group Inc. in Stamford, Conn., said he doesn't know the details of McKay's resignation from SAP America. But he added that joining Mercator gives McKay the chance to work for a fast-growing company in the enterprise application integration business, which Sholler described as a "fairly hot" market for vendors.

However, McKay will face some immediate challenges in his new job. The announcement of his hiring follows a warning issued on Friday that Mercator's second-quarter earnings will likely be just half of what Wall Street analysts were expecting despite revenue that should be slightly more than the $35 million that outside estimates had predicted.

Mercator, which plans to release its full financial results on Thursday, attributed the earnings shortfall to higher-than-expected sales and marketing expenses during the second quarter. Despite the warning, Connie Galley, the company's president and CEO, said in a statement that Mercator officials remain "confident in the strength of our business and see no change in our business fundamentals."

Sholler said he thinks Mercator's earnings suffered because the company didn't promote itself aggressively enough as a combined integration company -- one that can supply tools for tying together applications both within companies and for business-to-business setups that go across multiple organizational boundaries. Such dual capabilities are "seen as the future direction of the [integration] business," Sholler said.

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