With revenue growth slowing, Banctec Inc. said last week that its chairman and chief executive officer of the last 12 years, Grahame N. Clark Jr., is planning to retire.
The Dallas vendor of check processing and core banking software has had difficulty in recent quarters translating acquisitions into consistently higher revenues.
"I just think it is time for a transition to a new generation of leadership as the company prepares to go into the next millennium," said Mr. Clark, 55, who has worked at the company for 18 years. He said he will stay on until a successor is found.
During his tenure as CEO, Mr. Clark led the company through a seven-fold increase in revenues, to $603 million in 1997. Growth stemmed largely from acquisitions of technology companies specializing in software for item processing, document management, and image-based workflow. Banctec also branched into core banking software for community banks through its acquisition of Advanced Computer Systems in 1993.
But Banctec has struggled in its attempt to transform itself from a supplier of item processing hardware to a provider of software and services. The company expects no revenue growth this year.
Its third-quarter revenues, reported Oct. 26, were $157 million, up 4.6% from the year before. Net income of $41.7 million was down 10% because of increased operating costs.
The company's stock price has plummeted 56% from its 52-week high of $28.75 on Dec. 23, 1997. The stock closed Friday at $13.
"There has been a lot of disappointment in terms of the market valuation for the company," Mr. Clark said.
Consolidation in the banking industry and the year-2000 computer problem have adversely affected Banctec, said William Bradway, an analyst at Meridien Research, a Needham, Mass., bank consultancy. Banks have less money left over to buy systems from vendors such as Banctec, he said.
The company has taken several steps recently to shore up its stock price. This year it bought back 2.2 million shares of stock-15% of the company-for $50 million. It plans to repurchase another one million shares in the next 12 months.
Using a review by Booz, Allen & Hamilton, a New York consultant, Banctec plans to reorganize its operations into two units.
One will sell financial transaction processing hardware and software to the bank and nonbank financial services markets. These activities generate about 80% of Banctec's revenues.
The other will offer maintenance and support services for related technologies such as telecommunications and various PC-based software applications like document imaging.
The reorganization, which will include a consolidation of facilities, will result in a charge of $30 million to $35 million in the fourth quarter. It will take 12 to 18 months to complete.
Banctec officials are upbeat about the company's long-term revenue potential. The company is well positioned to capitalize on emerging growth markets such as image-based archiving and document workflow systems, said Susan Seiter, director of investor relations at Banctec. For example, it is involved in a large image-based item archiving pilot test at BankAmerica Corp., she said.