BEDFORD, Mass. (AP) — Progress Software Corp. said Monday that Jay Bhatt, its president, CEO and board member, is resigning to lead another software firm.
The company, which makes business management software, said the CEO's departure may hurt its fourth-quarter revenue growth. It backed off its prior guidance for the quarter, and it rescinded its share repurchase plans.
The stock plunged on the news. Progress shares fell $2.81, or 13.1 percent, to $18.67 by midday, with more than three times the typical number of shares changing hands.
The Bedford, Mass.-based company is in the midst of a number of changes, with plans to aggressively cut costs and sell off 10 of its non-core business lines.
Bhatt said he is headed to serve as CEO of a privately held corporation in another segment of the software industry, but his exact destination was not disclosed.
Progress said he will continue in his current role until Dec. 7.
The company said it is starting a search for a new chief executive. Phil Pead, non-executive chairman of the board, was named executive chairman of the board.
The company said its fiscal fourth-quarter revenue may slip due to the CEO's departure and backed away from its guidance for the quarter.
It also said that while it expects to maintain strong cash flow, it is unable to complete its plans to buy back $150 million of its shares by the end of its fiscal year. The board has authorized the company to begin repurchases of stock as soon as possible.
Jefferies analyst Aaron Schwartz said that the changes will stir up some overall uncertainty about the company.
The CEO change comes at a difficult time as the company is in the midst of a strategic shift authored by Bhatt, who joined the company just a year ago, Schwartz said. He noted that Bhatt put together a new senior management team as part of the turnaround plan, and further change is now a potential risk.
The analyst also said that the board should now consider all its strategic options and said he does not recommend the stock due to the potential uncertainties. He kept a "Hold" rating and $23 price target on the shares.
Progress shares have traded between $17.01 and $24.76 in the past 52 weeks.
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