The board of analytical applications firm Hyperion Solutions Inc summarily removed both its president and chief executive officer John Dillon, and its head of worldwide sales William Binch yesterday, saying it had problems with their expectation management and forecasting. The company immediately began a search to find a new CEO. Chief financial officer Stephen Embler, who takes over as president and CEO on an interim basis, said that the challenges of merging Arbor Software Inc and Hyperion Software Corp had been somewhat underestimated.
Hyperion gave away very few other details about the reasons for the move, which comes a week after the company’s user conference and in the middle of its fourth fiscal quarter. But bad news has been mounting since the beginning of the year when Hyperion reported a weak second quarter, pushing the stock down to its lowest level since the previous October. Third-quarter earnings also came in well below expectations, with the company blaming merger-related sales performance issues, and a general industry slowdown in license sales. Sales of Arbor’s Essbase product line have been generally strong, but Hyperion’s financial applications business has been struggling. One reason is the ending of a reseller agreement for Hyperion Financials from Baan Co NV, which bought in $8m in pre-paid royalties in fiscal 1998. Baan’s Coda acquisition of Coda Group Plc last year meant it no longer needed to resell the Hyperion applications.
Embler said that Dillon and Binch had begun a number of initiatives to get the company back on track, and that those would be continued. This is not a change of direction, said Embler, who insisted that the company still viewed its merger strategy as correct. Hyperion has been attempting to merge its two sales forces together, although the sales teams are still physically split between Hyperion’s old Stamford, Connecticut office and Arbor’s Sunnyvale, California headquarters, which now serves as the company headquarters. The new CEO, and probably the sales manager, will be recruited to work in Sunnyvale, but there is currently no plan in place to close the East Coast office.
The search for a new CEO from outside of the company, may take a few months, said Embler, and the recruitment of a new head of worldwide sales will probably be left until the permanent CEO is in place. Embler said he was hoping to minimize the effect of the reshuffle on the current quarter. He said it was too soon to predict the effect on this quarter and the next, but insisted the company would continue to make progress, but it will be incremental.
Dillon took over the CEO, president and chairman’s position at Arbor Software Inc early in 1998, replacing retiring company founder Jim Dorrian. When the merger with Hyperion was completed in August 1998, Dillon took over as president and CEO of the combined company.
