One GTSI Shakeup He Won't Oversee
Monday, April 9, 2007
Dendy Young is retiring as chairman of Chantilly-based GTSI in May, this time leaving the turnaround to others.
Young, 59, was brought in as president and chief executive in 1995, when the company was struggling with dropping sales and dipping share prices, and his job was to turn the business around.
GTSI, originally Government Technology Services Inc., was selling computers to the government.
Young made changes in management, dealt with a federal investigation into contracting practices and made progress. He was chief executive until February 2006, when Jim Leto replaced him. Young remained chairman. Shortly after, GTSI's accounting firm said there was "substantial doubt" the company could continue as a going concern because of problems with its financial statements. The stock sank from $8.45 a share in December 2005 to $5.98 in April 2006.
As he leaves as chairman, the company has restated its earnings for 2004 and 2005 -- which barely affected its bottom line -- and narrowed its losses to $3 million last year from $13.7 million in 2005. And its stock price has risen; it closed Friday at $11.69 a share.
In the past few years, the company has been changing itself from a seller of equipment to a services provider.
"Dendy got a great deal of appropriate credit for building the company as a reseller business," said Stan Soloway, president of the Professional Services Council, an industry trade group for government contractors. "The industry has undergone change. It is much more of a service delivery, and he deserves credit for it growing into that. He recognized where it needed to go.
"They've gone through several years of transforming the company, and he deserves a lot of credit for what he did, bringing in the right people to guide it through the transition. He leaves a pretty solid legacy in the industry."
Born in what is now Zimbabwe and a graduate of Massachusetts Institute of Technology and Harvard Business School, Young said he got into the world of government contracting after meeting a "cute blonde in a bar" in Boston. Young went to her home in Washington to meet her parents and got introduced to a neighbor of the family who was in government contracting. He didn't stay with the blonde, but he did stick with government contracting, and in 1975 started working at Federal Data Corp. in Bethesda.
Six years later, he left and eventually went on to found two companies -- Falcon Systems, which sold large computer systems, and sister company Falcon Microsystems, which sold Apple computers to the government. In 1988, Oracle bought Falcon Systems and in 1994 Falcon Microsystems was bought by GTSI. Young became GTSI's chief executive the next year, just as the company was "going through some bad times," as he put it.
He was the fourth president in 12 months, arriving during a Department of Justice investigation. The company had been stuck with $22 million worth of computers on a deal gone wrong with the Air Force. Its lenders and auditors -- worried about the instability of the company's leadership -- threatened to put it into bankruptcy. It had extensive employee turnover, was losing money and some of its largest customers were threatening to stop doing business with the firm. A new internal computer system was a disaster.
"My first year at GTSI was spent fighting lots and lots of fires," Young said. "I was CEO during some very tough times.