December tech CFO exits could provide opportunities for activist investors, hedge funds11 January 2008

More technology CFOs quit last month in a growing December phenomenon – seeking better opportunities elsewhere in a time of high pressure.
From giants like listed Analog Devices and Novellus Systems to mid-sized Advent Software, Electro Scientific and private Agiliance, CFOs left, abruptly or not, and will end up in equivalent positions elsewhere, or at private equity firms, industry executives said. A handful retired.
The interim could be a time when activist investors or hedge funds see opportunity, industry bankers said, because management is distracted and may not have time to focus on business growth. Last January, Motorola jettisoned a veteran CFO and announced an attempted turnaround – which attracted investor Carl Icahn. In 2005, Icahn, Providence Capital Management and others accumulated a nearly 30% stake in listed Siebel Systems after similar executive shifts – and helped force it into the arms of listed Oracle.
Since the options probe of more than 250 US companies started in mid-2005, many companies that had to restate financials and seek new CFOs (or even CEOs), have become targets. Examples include listed RSA Security, now part of listed EMC; listed Mercury Interactive, now part of listed Hewlett-Packard and listed Symbol Technologies, now part of listed Motorola. At listed BEA Systems, which could be subject to a renewed bid by listed Oracle, CFO Mark Dentinger has remained.
“It’s not a big issue,” said a technology banker who shepherded a large acquisition by one of these companies. “If a CFO leaves now, he will find that in his new job, options get reloaded, he’ll find more opportunity and there’s lots of upside.” The caveat is that even in a restatement, no improprieties are found.
Industry bankers said the trend has escalated for three reasons: more CFO responsibilities for reporting have sent salaries higher, many executives held underwater options and bigger companies are seeking experienced people from smaller ones. Representatives of executive search firms confirmed the trend.
In some cases executives announce they are leaving long in advance of their departures, such as at Novellus Systems, where CFO William Kurtz announced his departure after years of service and said he would remain at least a quarter to assist EVP Jeff Benzing as he assumes the job. In other cases executives make sudden departures, as happened with Brooks Automation’s Robert Woodbury, who left immediately due to a management shake-up by a new CEO and announcement of a replacement search.
Some executives switch to the high-tech sector from others like industrials because of better upsides, industry veterans said. Two very prominent examples are listed Agilent Technologies CFO Adrian Dillon, who shifted from the same post at listed Eaton, and Microsoft CFO Chris Liddell, who held the equivalent at listed International Paper. Most other tech companies, though, from listed IBM to Texas Instruments to Xerox, have promoted from within or recruited people with industry experience.

by David Zielenziger in New York

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