OpenText has replaced Mark Barrenechea, its CEO and CTO of nearly 14 years, and will explore selling off some of the “non-core assets” of its business.
The leadership change has extensively shuffled the company’s C-suite and kicked off an executive search for a permanent CEO. Executive vice president of international sales James McGourlay has taken on the top job in the interim, while chief product officer Savinay Berry now presides over CTO duties. OpenText chairman and former CEO P. Thomas Jenkins has been appointed chief strategy officer, and will lead the new executive search committee.
The executive changes come shortly after OpenText CFO Chadwick Westlake announced he would depart the company to take over as president and CEO of Equitable Bank following the unexpected death of Andrew Moor.
OpenText also said it would work with financial advisors to “explore portfolio-shaping opportunities” that enhance focus on its core Information Management for AI business,” which could be fueled by redeploying capital from “non-core assets.” OpenText cautioned there could be no guarantees this process leads to a transaction.
The change in direction follows the company’s fiscal year-end earnings last week, which showed a 10 percent drop in revenue year-over-year, though OpenText attributed 7 percent of that decline to the divestiture of its app modernization and connectivity business. While organic growth at the company waned, National Bank of Canada analyst Richard Tse said in a report that the earnings showed signs of stabilization. OpenText’s stock price reacted favorably, jumping 10 percent on Friday.
Tse said the company’s leadership change likely stemmed from OpenText’s inability to surface value from its broad product portfolio under Barrenechea, and said the move to sell off parts of its business would be positive in simplifying its ability to pursue collective growth across its portfolio. Following the leadership shuffle, OpenText’s stock price opened with a brief 10 percent bump but dropped below its opening price of $43.09 CAD per share later in the morning.
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OpenText is in the midst of executing a three-year “business optimization plan” to bring the company’s costs in check, which Barrenechea kicked off last year by cutting 1,200 employees. The cuts were expected to save the company $150 million per year, and OpenText cut another 1,600 jobs this past May as Barrenechea told employees that embracing artificial intelligence (AI) was a “number one priority and baseline expectation.”
“With the Company’s Business Optimization Plan well underway, and given our position at the forefront of Information Management for AI, I am confident that we will continue to innovate across these areas and deliver solutions that power our customers’ businesses,” McGourlay said in a statement.
Founded in 1991, OpenText provides a suite of cloud-based information management solutions to businesses, competing with the likes of IBM, ABBYY, and Hyland. The company has adapted over the years to introduce cloud and AI services, including cybersecurity and AI agents.
Feature image courtesy OpenText blog.