Poor performance at Synchronoss (Bridgewater) after its acquisition of Intralinks (New York) for more than $800 million earlier this year — which saw Ronald Hovsepian become CEO of the company — has led to a shake-up at the company.
Hovsepian has now stepped down. Returning to the role of CEO is Stephen Waldis, founder and chairman of the board. Also returning to the company as CFO is Lawrence Irving, the former CFO, who was with the company from July 2001 to April 2014. CFO John Frederick, who came onboard with the acquisition, has also resigned.
The official reason for Hovsepian’s and Frederick’s departures is to “pursue other interests,” according to a press release, but the timing coincided with the announcement that, “based on preliminary financial information, Synchronoss expects total revenue for the first quarter of 2017 to be $13 million to $14 million less than the company’s previously announced guidance. Operating margins are expected to be 8 percent to 10 percent, which are less than [the] previously announced guidance.”
Waldis founded and led Synchronoss for 17 years. The company began by disrupting the mobile phone activation space, and when that business started to become commoditized, Synchronoss shifted to a broader source of revenue, with an emphasis on the personal cloud business. Carriers were able to offer their customers their own cloud.
Then the company allied with Goldman Sachs to provide “mobile phone software that creates a whole new layer for mobile security,” addressing security concerns brought on by the “bring your own device” trend at enterprises. Synchronoss also made many acquisitions that enabled it to move it towards its goal of attacking the enterprise market, including the acquisition of Intralinks.
"I am incredibly passionate about Synchronoss,” said Waldis. "I look forward to working with the entire team to drive success for our customers, partners, employees and shareholders. I am pleased that Larry is rejoining Synchronoss along with me. His extensive experience and deep knowledge of the company’s business and financial underpinnings will be major assets to me and the management team.”
Acknowledging the company’s missed performance guidance, Waldis said in the press release, “With a track record of meeting or exceeding expectations, we are of course disappointed with our Q1 performance in this first quarter following our acquisition of Intralinks.
“In view of the Company’s performance in the first quarter, we expect this will impact our full year guidance. We intend to manage our expenses in line with our revenues to generate strong cash flow for the year. We continue to believe in our long-term strategic vision, while executing on our combined synergies. We remain confident in our long-term growth opportunities and strong relationships with our customers, and we are committed to delivering strong returns to our shareholders.”
The company has scheduled an earnings call for May 9.