LogicaCMG has announced the retirement of chief executive Martin Read after 14 years at the helm of the IT services firm.
The move comes just days after Logica issued a profits warning with its quarterly results, prompted by the poor performance of its UK arm. Although the IT services firm's public sector business is holding up well, it is struggling in the commercial sector.
Logica said it had been planning for Read’s eventual departure for some time, but Read had “decided to accelerate his retirement plans” in the light of “the unsettling speculation following the company's recent trading update”.
Read will remain in post for a transition period while a successor is identified, but the Logica board signalled that wider changes may lie ahead, adding that it was “considering the appropriateness of the board’s current size and structure”.
Additional independent non-executives are expected to be announced soon.
Logica chair Cor Stutterheim said: “Martin is a visionary leader, who came to a small, largely UK business of 3,000 employees in 1993 and led its transformation into a major international operation of 40,000 employees in 41 countries. The Board has accepted his decision with regret and we wish him every success in whatever he takes on after he leaves us."
Analyst firm Ovum noted the fall in share prices at Logica following last week’s figures and said Read’s move was reported to have been precipitated by activist shareholders, including Morley, which owns 2% of the company.
Ovum analyst Phil Codling said the move was not just a reaction to last week's first quarter figures, “but rather reflects longstanding shareholder dissatisfaction with the company's performance”.
“Consider the fact that over the past five years, a period when tech stocks and equities more broadly have enjoyed a sustained recovery, LogicaCMG's share price has actually fallen – by 18%,” he said.
“Patience had clearly run out, and last week's disappointment was the final straw. LogicaCMG now needs to appoint a successor rapidly if it's to dispel internal and external concerns over its future.”
The IT services firm was “undoubtedly in for a period of increased uncertainty” Codling predicted. Speculation over possible takeovers, including possible private equity interest, would "be rife", he said.