John Mutch is meeting with customers as his company recovers from past financial problems.
John Mutch, the new chief executive officer of Peregrine Systems Inc., is meeting with customers across the United States and in Europe during the next two weeks, as the company recovers from bankruptcy.
San Diego-based Peregrine, which makes software for tracking information technology assets, was under bankruptcy protection for 11 months after the company overstated revenues for several quarters. The company emerged from bankruptcy in August and settled all of its claims with the Securities and Exchange Commission. Mutch, who became CEO in August, said the company, catching up on its SEC filings, will file its annual report for fiscal year 2003 by December. The fiscal year ended March 31.
SEC officials had leveled serious charges against Peregrine, including booking sales to resellers with the tacit understanding that the resellers were not obligated to pay. The company, in the SEC settlement, is strengthening its internal controls to prevent such occurrences in the future, Mutch said.
Now the company, which lists the Internal Revenue Service, Defense Logistics Agency, Food and Drug Administration and other federal agencies as customers, is trying to move forward. The company emerged from bankruptcy with $60 million cash. Creditors own 63 percent of the company's shares and equity investors hold 33 percent. Ownership of the remaining 4 percent has not yet been determined.
. "We're all excited about getting back to the normal rhythms," Mutch said today, during a stopover in Washington D.C. He and executive vice president Andrew Cahill have met with customers in New York, Boston, Washington, D.C., and Columbus, Ohio, and are leaving this week for Paris, Frankfurt, Germany, and London.
Before coming to Peregrine, Mutch was CEO and president of HNC Software, a San Diego software company, which Fair Isaac Corp. acquired in August 2002. The company's revenues grew from $128 million to $226 million during Mutch's tenure there.
Although Peregrine sold off several units during the bankruptcy process, cutting its total workforce from more than 3,000 to slightly more than 600, the core business has survived, he said. "Even in a really difficult set of circumstances, we've had good momentum," he said.
In general, companies can recover from bankruptcy and ethical problems and continue to be successful federal contractors, as long as they have an adequate base of existing agency customers, said John Goggin, vice president and director of government strategies at the META Group Inc.
"Once you've gone through the competitive process and you've got a viable vendor providing a product that works, government is slow to change," he said.
Mutch, who was on Peregrine's board of directors before becoming CEO, said the company made sure to keep its customers and employees in the loop as it struggled through its issues. The company still needs to rebuild its image, but communications mitigated the tarnish, Mutch said.
"There is certainly a need to communicate," he said. "The viability issue needed to be addressed."
Federal, state and local government clients account for about 25 percent of Peregrine's customer base, he said. "The public sector is actually ahead of the private sector right now" in market potential, he said.
Meanwhile, governments are paying increasing attention to efficiency, which creates a market for Peregrine's products, said Cahill. The same market drivers apply to foreign countries and state and county governments, he added.
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