Rosetta Stone latest to get new CEO

February 26, 2012

A string of Washington area companies are experiencing turnover at the top.

Arlington-based Rosetta Stone became the latest firm to take on new management, as the language software firm announced last week that Chief Financial Officer Stephen M. Swad would step into the chief executive role.

The companies in transition hail from a broad range of industries.

Marriott International appointed Arne Sorenson to replace its longtime executive J.W. “Bill” Marriott Jr. in December.

In more recent weeks, government contractors Science Applications International Corp. and Computer Sciences Corp. have installed new leaders. The chief executives of mortgage financiers Fannie Mae and Freddie Mac have also announced they will depart this year.


Stephen M. Swad is to be Rosetta Stone’s new chief executive. (Courtesy of Rosetta Stone)

The turnover comes at a time when change is taking place in executive suites across the country. A monthly report from Chicago-based Challenger, Gray & Christmas, an executive coaching firm, found 123 CEOs left their position in January, the highest upheaval since March 2010.

“I do think we’re in an era of change right now,” said chief executive John A. Challenger. “Companies have been slowly digging their way out of the problems they saw in the recession.

“As companies move into a period where they see the potential for better, higher growth … then we see companies hire ... people who are more likely to help them tap into the potential that seems to be out there in the marketplace.”

In total, 1,178 chief executives nationally stepped aside during 2011, a slight decline from the 1,234 who did so in the year prior.

Rosetta Stone’s change did not come as a surprise to company observers. Outgoing chief executive Tom Adams said last fall he would transition to nonexecutive chairman as soon as the company found a suitable replacement.

The firm is known for the canary-yellow boxes of software that sell on shopping mall kiosks for a premium price. The firm has recorded declining earnings in recent quarters as U.S. consumers bought fewer of its products.

The company posted a net loss of $1.2 million for the third quarter, which ended Sept. 30, compared with a net loss of $385,000 during the same period in 2010. That decline came even as total revenue climbed 5 percent to $64.2 million for the quarter.

Swad, who previously held CFO positions at AOL and Fannie Mae, said in an interview that he will continue Rosetta Stone’s expansion into foreign markets, particularly Asia and South America, where the company has found success among English language learners.

“A company that does that successfully is going to be impactful ... especially in countries where learning English changes their lives,” Swad said.

He also said the company would be more open to partnerships and acquisitions under his leadership, whereas much of its software development to this point has been done in house.

“In Steve, we have found a leader who has the right mix of vision and strategy, as well as a strong background in operational execution, which will allow Rosetta Stone to pursue its growth plans,” outgoing Chairman Laurence Franklin said.

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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