Roderick C. McGeary, who took over at BearingPoint Inc. after the abrupt resignation Wednesday of chairman and chief executive Randolph C. Blazer, declined yesterday to talk about the circumstances of the management change but acknowledged the need for a new direction.
"I'm not coming into a broken situation that needs a lot of changes," said McGeary, 54. "But I do think I can grow the company and move it forward."
McGeary, a board member who will move from California to take charge of the technology consulting firm, acknowledged criticism by investors and analysts that the company has been slow to adapt to changes in the market in recent years.
Although the McLean-based company's government work has grown with the boom in the contracting sector, McGeary said its commercial consulting needs immediate attention.
"We're going to focus on financial services . . .," he said. "I believe that business can grow at double-digit growth rates."
BearingPoint does everything from integrating technology systems to developing customized software for customers, but some analysts say the company has failed to zero in on the most lucrative consulting practices.
"In the commercial business, they haven't been targeting the areas that have had the biggest growth, like business process outsourcing," which involves taking over back-office functions such as accounting and human resources, said William R. Loomis, an analyst with Legg Mason Wood Walker Inc.
Although the company was profitable in its most recent quarter, revenue from commercial accounts has grown more slowly than sales to the government. While government contract revenue was up almost 22 percent from the same period a year ago, for example, sales to consumer, industrial and technology customers rose 11.2 percent.
BearingPoint also has run into some financial and accounting problems.
Last week the company restated its results for the third quarter. The company said it had to reduce two line items by $3 million each in its quarterly balance sheet. McGeary called the restatement "a very minor amount."
In May, BearingPoint's $250 million line of credit was placed on review by Moody's Investors Service.
Describing Blazer's departure as a mutual decision "by the board and Rand," McGeary said, "We are in a business where change is part of reality. We need to change the business to adapt to our clients' needs."
Some analysts say the company's management team has not been aggressive enough in increasing the bottom line.
"They were very passive. . . . There was a lack of vision in going out and seeing what the market was going to do," said Jeffrey Embersits, an analyst with Shareholder Value Management.
McGeary, 54, said that as he works to boost profit, cutting costs will be a priority. But he added that no layoffs are expected. BearingPoint has 16,557 employees, including more than 3,100 in the Washington area.
"We do not have the problem of too many employees serving our clients," he said. "We are in a hiring mode and will continue that going forward."
McGeary would not comment on industry speculation that the company is a target for acquisition.
Blazer, 54, did not return calls for comment, and McGeary did not speculate on the former chief executive's next move. Between 1997 and 2002, the two men served as co-chief executives of the company, which was previously called KPMG Consulting.
BearingPoint's board of directors, which accepted Blazer's resignation at a meeting on Wednesday, has hired an executive search firm to find a permanent replacement. McGeary said he will be a candidate.
Investors responded positively to the company's changes yesterday, sending BearingPoint shares up 81 cents, or 9 percent, to $9.81. Analysts who track the firm had mixed reactions. Some said a change was needed.
"While such senior resignations are rarely positive, we think this situation is positive," Loomis wrote in a report yesterday. "We believe the board of directors is unhappy with the slow pace of fundamental improvement . . . and is acting proactively to bring in more effective management."
But Paul Hsi, an analyst with Moody's, yesterday reiterated a negative outlook for the company that the rating service issued in September.
"Any time you have a change of leadership, it signals that there is some unrest with the way the company has been performing," Hsi said. "The company has had difficulty integrating some of the acquisitions it has done internationally and some difficulty curtailing costs on federal contracts, using subcontractors."