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Ciber’s new CEO plots more predictable course

Monday, January 10, 2011   (0 Comments)
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Ciber’s new CEO plots more predictable course 
by Greg Avery
Denver Business Journal
Friday, December 24, 2010, 4:00am MST

After six months on the job, Ciber Inc. CEO Dave Peterschmidt is telling Wall Street and anyone else who’ll listen that the company needs to get more focused, sell better and become more predictably profitable.

Peterschmidt kept a low profile while he and others developed a new strategy for Greenwood Village-based Ciber (NYSE: CBR), which helps companies knit together large IT hardware and software systems.

That changed this month. He hosted a meeting on Wall Street for investment bank and industry analysts, and granted his first media interviews.

Peterschmidt’s message: Ciber will change its history of choppy financial performance.
"The operational regimen of this company was not good,” he said. "We’re going to stop doing some things, and we’re going to focus on some very specific vertical markets.”

Ciber operates in 19 countries, employing 8,500 people. It generated $794 million in revenue in the first nine months of 2010.

The company, which had only one quarterly loss in its first 16 years as a public company, has been stung by a series of difficulties.

In 2008, during the depths of the financial crisis, Ciber had to refinance lines of credit and reduce debt to satisfy the tightening standards of its lender. Doing that while clients’ spending shrank sharply was almost impossible, said Mac Slingerlend, Ciber’s CEO at the time.

But Ciber managed to do so.

Slingerlend said 2008 also was marred when Ciber "screwed up” a major U.S. project — something it fixed well enough to win more work from that client.

Then, earlier this year, Ciber wrote down the book value of its operations by $112 million, turning the company’s 2010 profits into a likely $1.02-per-share loss.

Ciber hired Peterschmidt — a former CEO at Silicon Valley companies OpenWave and Inktomi, and ex-chief operating officer at Sybase — on July 1 to replace Slingerlend, who had run the company for 12 years.

Peterschmidt’s task was to smooth out Ciber’s performance, put the company on a growth curve and fix past integration problems.

Peterschmidt said it was the only kind of work he wanted if he was to be a CEO again.

"I wanted the opportunity to go in and help a company that was struggling strategically and operationally, and Ciber fit that,” he said.

His first tasks are to institutionalize focus and operational discipline that Ciber has lacked, he said.
The company hasn’t had an internal software system capable of tracking profitability of ongoing jobs, nor does it have a chief information officer.

"In itself, that’s kind of counterintuitive given the business we’re in,” Peterschmidt said.
Ciber is interviewing CIO candidates now and plans to have one on board by early 2011.
Peterschmidt wants 65 percent of Ciber’s business to be in supplying business analytics and IT to manufacturing, health care and utilities companies. Another 30 percent should come from government, education, financial services and retail clients; the final 5 percent should be from small businesses, he said.

Ciber should be more specific beyond those breakdowns, he said.

For example: Within health care, Ciber intends to focus on selling services to insurance payers. In financial services, Ciber intends to seek out midsized firms, not the global financial giants for which larger IT firms compete, Peterschmidt said.

He sees Ciber’s niche being among companies generating between $1 billion and $10 billion in annual revenue, with Ciber’s sweet spot being companies of about $3 billion.

"We’re large enough in scale to handle the big projects, and yet we’re small enough to be highly collaborative,” he said.

Many of the biggest IT services aren’t as flexible, and that’s a strength on which Ciber can capitalize, Peterschmidt said.

But the company’s sales force will have to focus on winning larger and longer-term client contracts, too. Ciber also will more closely scrutinize the profitability of jobs before accepting them, Peterschmidt said.

Its global sales force will start having weekly conference calls with headquarters. A management committee will have to approve any deal worth more than $1 million before a contract’s signed, he said.

If all that’s done, the company should be able to record double-digit revenue and earnings-per-share growth, which Peterschmidt considers modest goals.

"I don’t know you’d call that a stretch to say we’ll grow at the rate we did in the last quarter,” he said. "I think the big thing is that we’re doing a lot to change the business right now.” | 303-803-9222

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