There’s little doubt who’s in charge at Epicor Software Corp. these days.
Chief Executive Tom Kelly is a 55-year-old with a passion for rugby who likens his management style to former college basketball coach Bobby Knight.
“I’m a very competitive person, I’m a driver,” Kelly said. “When it comes to competing, doing our jobs and getting it done, I am very, very focused.”
Kelly played rugby, football and baseball into his 50s. He even played in a semi-professional football league. He once broke his jaw and stayed business as usual for the two months it was wired shut.
At Epicor, Kelly’s working to prove himself as a hands-on manager. The company makes enterprise resource planning software that helps midsize companies manage accounting, customer contacts, inventory, sales and other tasks.
Customers include retailers, manufacturers, distributors, hotel operators and financial services companies.
Analysts welcome Kelly’s tough approach. Epicor has a slumping stock and has seen some recent results fall short of expectations.
Shares are off about 40% in the past year with a market value of about $470 million last week.
“We know he’ll bring some discipline to the company,” said Joel Fishbein, analyst from Lazard Capital Markets LLC in New York. “I think he’s a pretty tough guy.”
That’s saying something.
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Epicor in Irvine: about 300 local workers |
Kelly’s predecessor, George Klaus, was a pretty tough guy himself. He ran the company for 12 years, including turning it around earlier this decade and then building it up with big acquisitions.
Klaus now is executive chairman.
Broken Bones
But Kelly brings his own brand of toughness. He’s broken several bones besides his jaw,all for the love of sports.
“I’m not easily intimidated,” he joked. “I would wish I was a John Wooden kind of coach, but I’m probably more of a Bobby Knight.”
Kelly was given the chief executive job at Epicor over former president and chief operating officer Mark Duffell, who had been the clear No. 2 to Klaus. Duffell left in May.
Before Epicor, Kelly was chairman and chief executive of Santa Clara’s MontaVista Software Inc., a maker of Linux-based software for autos, set-top boxes and other products.
He’s served on Epicor’s board since 2000.
Duffell had worked at Epicor for a dozen years. Last week, he and Epicor’s former chief financial officer, Michael Piraino, started an investment company to buy and combine business software makers,a tactic honed at Epicor.
At Epicor, Duffell was “being strongly considered for the (CEO) position,” analyst Fishbein said. “But I think the board wanted somebody from the outside with CEO experience. He definitely wanted the job.”
Kelly, who’s logged more than two decades in software, hasn’t put anyone in the chief operating officer’s spot. Nor does he plan to.
He’s flattened out reporting for sales executives,those who used to report to the Chief operating officer now go directly to him.
“I have high expectations of my executives,” Kelly said. “I’m not relying on a chief operating officer to stand between myself and them. I expect my executives to operate in a very senior capacity,and I hold them to high standards.”
Wall Street is looking for “execution, above all” from Kelly, Fishbein said.
“The company has struggled in terms of consistent performance in the past few years,” he said. “What the Street’s looking for him to do is to instill some accountability in terms of performance.”
Epicor projects a return to profitability in the current quarter. It’s looking for profits of $12 million to $13 million on sales of $130 million to $134 million.
Analysts’ estimates are at the high end of the company’s guidance,profits of about $13 million on sales of $133 million.
“The most important thing Tom can do now is get the business running more steadily,” said Peter Goldmacher, an analyst with Cowen & Co. in San Francisco. “If they do some of the hard things they have to do,break a few eggs to make that omelet,they will get back on track.”
In addition to the operational changes, Kelly is working to improve communication within the company, which has some 3,200 workers worldwide.
He’s fond of meetings.
“I probably have more staff meetings than the CEO and the COO before me,” he said. “That’s my style. I’m a big believer in getting people together, even if it’s just for a brief period of time. I rely on that a lot.”
2008 Outlook
For 2008, Kelly said he’s eyeing sales of $536 million to $544 million. Epicor had sales of $430 million last year.
“We are going to spend 2008 getting adjusted to our new size,we will be doing more than $500 million in revenue and that’s a much larger company,” he said. “That calls for a different operating philosophy and I’m instituting that. I think the company feels that and is responding very well.”
