MicroStrategy outlines plans for executive changes, job cuts after lackluster earnings

MicroStrategy chief executive Michael J. Saylor outlined plans Monday to replace senior managers and cut jobs at the Tysons Corner-based company during a conference call with Wall Street investors and analysts.

The 47-minute conversation offered a rare chance for financiers and journalists to hear about the company’s short-term strategy and day-to-day functions directly from Saylor, who founded MicroStrategy 25 years ago but has become particularly quiet about its operations in recent years.

Saylor said during the July 28 call that MicroStrategy has been experimenting over the past several years with various emerging technologies, including cloud computing, social media and mobile identity, to find those that best complement its existing business of selling data analytics and business intelligence software.

“When we think about 2014, I truly consider it a transition year for us,” Saylor said. “We’ve been working on significant innovations, especially over the past few years, and I believe these investments will position us for the long-term.”

The company, however, has seen its operating expenses climb and its profitability evaporate due, in large part, to increased spending on staff and other resources in the company’s research and development, and sales and marketing divisions.

MicroStrategy posted a net loss of $16.8 million, or $1.49 per share, for the first six months of the year, a steep decline compared with profit of $50 million during the same period in 2013. Its net loss for just the second quarter totaled $10.3 million, or 91 cents per share.

“We realize that we may have grown our resources faster than was appropriate and therefore we recognized the need to trim back in areas where we were not operating in an efficient manner,” Douglas Thede, MicroStrategy’s chief financial officer, said during the call.

The company has already shed 115 jobs in 2013 in the areas of product support, consulting and administration, according to Securities and Exchange Commission filings. Additional cuts are expected as part of a corporate restructuring during the second half of the year that executives say will save the company $40 million annually.

“We have a long history of profitability here at MicroStrategy, and we will work diligently to return ourselves to profitability in 2015,” Thede said.

A MicroStrategy spokeswoman declined to comment further on the plans.

Several large shareholders criticized Saylor and MicroStrategy earlier this year for shutting out investors and analysts, going so far as to question whether Saylor was still engaged in the business and call for his ouster.

“The tempo of the marketplace and the opportunities in the capital markets have both increased over the past few years, and our investors have pointed out that the company’s prospects would benefit from more communication,” Saylor said during the call.

Saylor also said the company is reevaluating its investor relations practices, and may begin conducting road shows and attending tech conferences.

Capital Business is The Post’s publication covering the region’s business community. For a daily rundown of Washington-area business news, sign up for the CapBiz A.M. e-mail newsletter at wapo.st/capbiz.

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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