nccanes
07-28-2003, 08:52 AM
This apparently was printed first in the Triangle Business Journal, but I found it on MSNBC's site:
Can Karmanos deliver?
By Leo John
Triangle Business Journal
Jul. 28 — RALEIGH - Is Peter Karmanos Jr., the 60-year-old chief executive of Detroit-based Compuware Corp., losing his golden touch?
On July 22, when the computer software company he founded reported its first quarter 2004 numbers, analysts gasped. The company had expected to rack up an earnings per share of six cents. Instead, it earned one cent.
The numbers also may have taken the breath of some people in the Triangle, where Karmanos has promised to establish an East Coast headquarters for Compuware at the American Tobacco complex in Durham.
During a January 2002 visit to Durham, Karmanos said Compuware would lease between 60,000 and 80,000 square feet in the complex, creating about 1,500 jobs over five years.
More than 18 months since Karmanos made that statement, the company has not signed a lease. But it continues to promise.
"We are going to sign a lease for 50,000 square feet that can accommodate about 200 people," Compuware spokeswoman Lisa Elkin says. "We hope to occupy the space by late 2004."
Such pledges from Compuware are not unusual in the company's hometown of Detroit, where Karmanos told a reporter last year that his company would have 50,000 employees by 2007. That's a stretch, given Compuware's dismal financials coupled with the fact that its current employee roster stands at just 9,356.
Moreover, analysts who follow the company say they've never heard a peep about an East Coast headquarters in Durham.
First Albany analyst Danian Rinaldi says Compuware has never mentioned an East Coast headquarters in any of its securities filings. "I've no knowledge of such a project," says Rinaldi, who in a July 23 research report rates Compuware a "neutral" stock.
Compuware's most recent financial filing paints a picture of a company that perhaps should consider shrinking, not expanding. Net income plummeted by 88.4 percent, to $2.6 million, compared to $22.5 million in the previous year, largely because of slowing revenue. Quarterly sales declined to $306 million compared to $346 million in the previous year.
Karmanos, who owns a majority stake in the Carolina Hurricanes hockey team, made no excuses. "This was a tough quarter for Compuware, and I am terribly disappointed with our results," he said in a conference call. "I don't like losing to begin with ... and with the best products ... it's difficult sitting here and reporting this kind of quarter," said Karmanos.
Compuware does have a cushion in the form of about $617 million in cash and investments. Still, growth is not an option at this point, says analyst Rinaldi. "Based on the company's performance, there will not be a significant expansion of staff," says Rinaldi, who does not own any stock in the company, nor does his family. Rinaldi says he is not aware of First Albany having a corporate finance relationship with Compuware but says it could do that at any time.
Karmanos' pledge to take a chunk of space at Durham's American Tobacco project is viewed as an important element in the success of the redevelopment, which is being undertaken by Raleigh-based Capitol Broadcasting Co. Representatives of Capitol did not return a phone call seeking comment.
At the Raleigh sales office of Compuware, the assumption is the company will go ahead with expansion in Durham. "As far as I know, the plans have not changed," says Fai Vitale, a Compuware representative in Raleigh who was involved in lease negotiations with American Tobacco.
In Detroit, Compuware remains one of the city's most high-profile companies, and Karmanos one of its best-known executives. The company recently put the finishing touches on a new $400 million corporate headquarters it committed to build before its financial fortunes went south.
Karmanos personally has felt the pain of his company. Until the beginning of the current decade, his name was a regular on lists of highly paid executives. In 2000, Forbes magazine ranked him as the nation's 34th highest-paid executive, at $87.5 million. He has not appeared on that list since.
In 1998, the same magazine pegged Karmanos' net worth at $1.01 billion, making him the 14th wealthiest person in the country. He has not appeared on that list since.
Can Karmanos deliver?
By Leo John
Triangle Business Journal
Jul. 28 — RALEIGH - Is Peter Karmanos Jr., the 60-year-old chief executive of Detroit-based Compuware Corp., losing his golden touch?
On July 22, when the computer software company he founded reported its first quarter 2004 numbers, analysts gasped. The company had expected to rack up an earnings per share of six cents. Instead, it earned one cent.
The numbers also may have taken the breath of some people in the Triangle, where Karmanos has promised to establish an East Coast headquarters for Compuware at the American Tobacco complex in Durham.
During a January 2002 visit to Durham, Karmanos said Compuware would lease between 60,000 and 80,000 square feet in the complex, creating about 1,500 jobs over five years.
More than 18 months since Karmanos made that statement, the company has not signed a lease. But it continues to promise.
"We are going to sign a lease for 50,000 square feet that can accommodate about 200 people," Compuware spokeswoman Lisa Elkin says. "We hope to occupy the space by late 2004."
Such pledges from Compuware are not unusual in the company's hometown of Detroit, where Karmanos told a reporter last year that his company would have 50,000 employees by 2007. That's a stretch, given Compuware's dismal financials coupled with the fact that its current employee roster stands at just 9,356.
Moreover, analysts who follow the company say they've never heard a peep about an East Coast headquarters in Durham.
First Albany analyst Danian Rinaldi says Compuware has never mentioned an East Coast headquarters in any of its securities filings. "I've no knowledge of such a project," says Rinaldi, who in a July 23 research report rates Compuware a "neutral" stock.
Compuware's most recent financial filing paints a picture of a company that perhaps should consider shrinking, not expanding. Net income plummeted by 88.4 percent, to $2.6 million, compared to $22.5 million in the previous year, largely because of slowing revenue. Quarterly sales declined to $306 million compared to $346 million in the previous year.
Karmanos, who owns a majority stake in the Carolina Hurricanes hockey team, made no excuses. "This was a tough quarter for Compuware, and I am terribly disappointed with our results," he said in a conference call. "I don't like losing to begin with ... and with the best products ... it's difficult sitting here and reporting this kind of quarter," said Karmanos.
Compuware does have a cushion in the form of about $617 million in cash and investments. Still, growth is not an option at this point, says analyst Rinaldi. "Based on the company's performance, there will not be a significant expansion of staff," says Rinaldi, who does not own any stock in the company, nor does his family. Rinaldi says he is not aware of First Albany having a corporate finance relationship with Compuware but says it could do that at any time.
Karmanos' pledge to take a chunk of space at Durham's American Tobacco project is viewed as an important element in the success of the redevelopment, which is being undertaken by Raleigh-based Capitol Broadcasting Co. Representatives of Capitol did not return a phone call seeking comment.
At the Raleigh sales office of Compuware, the assumption is the company will go ahead with expansion in Durham. "As far as I know, the plans have not changed," says Fai Vitale, a Compuware representative in Raleigh who was involved in lease negotiations with American Tobacco.
In Detroit, Compuware remains one of the city's most high-profile companies, and Karmanos one of its best-known executives. The company recently put the finishing touches on a new $400 million corporate headquarters it committed to build before its financial fortunes went south.
Karmanos personally has felt the pain of his company. Until the beginning of the current decade, his name was a regular on lists of highly paid executives. In 2000, Forbes magazine ranked him as the nation's 34th highest-paid executive, at $87.5 million. He has not appeared on that list since.
In 1998, the same magazine pegged Karmanos' net worth at $1.01 billion, making him the 14th wealthiest person in the country. He has not appeared on that list since.