MicroStrategy hands over operational reins to CFO

MicroStrategy Inc. has made its chief financial officer head of some key day-to-day operations in a move aimed at assuring customers and investors that the struggling vendor of data analysis software is addressing financial problems that emerged earlier this year.

"This appointment should send a signal to our investors, customers, partners and employees that nothing is more important than our financial soundness and integrity," Chairman and CEO Michael Saylor said in a statement.

In March, Vienna, Va.-based MicroStrategy announced that it had reduced its reported revenue for 1997 to last year. That announcement sent the company's stock into a free fall from a high of $333 per share on March 10 to $13.625 in this morning's trading. Two-thirds of the March 10 stock value fell off immediately following the announcement.

Eric Brown, who replaced former MicroStrategy CFO Mark Lynch after the restatements, is also now becoming the company's president. In his expanded job, MicroStrategy said, Brown will be responsible for accounting, financial reporting, contracts, administration, human resources and information systems.

Brown will be MicroStrategy's senior executive in charge of things such as internal controls and contract administration, according to the company. For those functions, he now reports directly to an audit committee that the company's board of directors created after the accounting problems surfaced -- not to Saylor.

In April, MicroStrategy released the adjusted figures, which changed last year's revenue from $205.3 million to $151.3 million, and its results of operations for last year from diluted net income per share of 15 cents to a diluted net loss of 44 cents per share (see story). The company also reduced its reported revenue for 1998 from $106.4 million to $95.5 million, and its results of operations for that year from an 8-cents-per-share profit to 3-cents-per-share loss. Revenues for 1997 were changed from $53.6 million to $52.6 million and bottom-line results from break-even to a 2-cents-per-share loss.

Today's announcement from MicroStrategy also included a new office of the chairman, comprised of Saylor, Brown and MicroStrategy co-founder and Chief Operating Officer Sanju Bansal.

The trio will be responsible for setting annual revenue goals, budgets, market positioning, product development and strategic initiatives. Saylor said the reorganization turns more of the "daily details" of running MicroStrategy over to Brown and Bansal, a move that "frees me to devote more of my energies to our future growth initiatives."

Bansal, who was also given the additional title of vice chairman, now has direct responsibility for the company's sales, marketing and customer services operations. He continues to report to Saylor, MicroStrategy said.

Meanwhile, the company said it has still been actively developing new products. Last month, MicroStrategy announced plans to develop new wireless business intelligence software with the help of engineers and $52.75 million in funding from wireless infrastructure services vendor Aether Systems Inc. (see story).

For more industry news, head to our Financial page.

Copyright © 2000 IDG Communications, Inc.

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