Earlier this morning, Sage announced that CEO Paul Walker is to step down. According to Richard Holway:
Sage is one of only two Holway Boring Award holders (the other is Capita). They are awarded for ‘boringly consistent earnings performance’. More precisely no earnings reversals for at least 10 years. Sage hasn’t reported an earnings reversal since its 1989 IPO – or even longer if I had such records to hand. But it is ‘Boring’ in another sense as it must have had the most stable management of any tech, or even FTSE100 company, in that period…
I called the company and they confirm that Walker’s leaving is a personal decision and that there is no back story. A spokesperson for the company said: “There is nothing more than has been announced. Paul’s young enough to go on and do other things.” I have my doubts. It is extremely unusual for a company like Sage to make an announcement of this kind without there being an announced successor in place. As Holway says:
Internal possibilities for the CEO role come from Paul Stobart (heads UK) and Paul Harrison (CFO) – clearly Sage has a ‘thing’ about Pauls! But Sage does face new challenges – not least from the Cloud where, frankly, Sage seems to have made rather half-hearted attempts. It might regret that when more ‘fleet-of-foot’ newcomers come eat their lunch.
There’s also the question mark hanging over Sage’s US operations.
I also called up Xero’s Gary Turner. We discussed the possibility of this move making way for someone who has the vision for Sage to become a cloud player. Gary believes that Sage’s numerous acquisitions over the years creates an environment where it is difficult for Sage to release a cloud solution in one territory without having an offering in others. I’m not as convinced though I understand the argument. Either way, uncertainty for Sage is good news for competitors who will be able to spin Walker’s departure as a sign of issues within the company.
