In a move that stunned software industry analysts and caused a sharp drop in the company's stock price, business applications vendor JD Edwards has announced that co-founder C Edward McVaney, who gave up the CEO's position 18 months ago, is back in the top job.
In late 1998, McVaney left the CEO job that he had held since JD Edwards was founded in 1977, and was replaced by Doug Massingill.
McVaney had stayed on as chairman, but Massingill was in charge of all operations at JD Edwards.
However, in the wake of McVaney's return as president and CEO, Massingill has resigned from the company and its board of directors.
A JD Edwards spokesman said the company's board decided "that it was time for a change, and that [McVaney] was the guy to lead this", because of his technical experience. Massingill, who has a marketing and sales background, "is a great business executive", the spokesman said. "But we just see that we need stronger product leadership, and that's McVaney's strength. He's more of a product visionary."
But Jim Shepherd, an analyst at AMR Research in the US, said he was "shocked and disappointed" by the move.
Like other vendors of enterprise resource planning applications, last year was tough for JD Edwards, as demand softened because of the approaching year 2000 deadline.
JD Edwards lost $US74.5 million in its fiscal year, which ended last October, and its revenue was virtually flat, at $US944.2 million. But the company beat Wall Street expectations in its latest quarter, reporting a $US3.6 million profit instead of a predicted loss.
However, David Dobrin, an analyst at Benchmarking Partners in the US, said JD Edwards hasn't taken full advantage of an increased sales force that Massingill built at the company.
Sales have "lurched along, and McVaney apparently got unhappier and unhappier about it", Dobrin said.
He added JD Edwards needs to do a better job of positioning itself for e-commerce and other Internet-based applications.