The CFO Revolving Door

Being a CFO for a high-tech company today apparently isn't all it was cracked up to be. At least, that's one conclusion that can be drawn from the rash of CFOs who've walked away from high-profile jobs in recent months.

The latest departure came Tuesday, when Stephen Collins stepped down from his post at online marketing firm DoubleClick Inc., where he'll continue in a strategic role through the first quarter of 2002. The announcement came less than a month after Collins told investors he didn't expect a rapid turnaround for the ailing online advertising market, and on the heels of a quarter in which DoubleClick lost $10.5 million and saw revenue drop 20% from a year ago.

To be fair, Collins says he's leaving for entirely personal reasons, and the fact that the man he groomed to be his replacement, Bruce Dalziel, will be taking over for him is evidence that his exit was carefully planned. In fact, Collins says he agonized over the decision. "I didn't want to seem like I was abandoning my friends."

But other CFO departures appear to have been directly related to their companies' performances. Just last week, Mark Perry resigned as CFO of struggling digital-subscriber-line service provider Covad Communications Co. "to pursue other interests," the company said. Covad lost $198.5 million in its most recent quarter and is busy negotiating with bondholders to climb out from under $1.4 billion in debt. A couple of weeks earlier, it was RealNetworks Inc.'s CFO, Paul Bialek, who decided to call it quits; the company cited "personal reasons." RealNetworks' profit for the quarter ended June 30 was down 77% from a year ago.

A week before that, Andrew Hajducky stepped down as CFO of Internet holding company CMGI Inc., with the company saying Hajducky wanted to "pursue an external opportunity." His exit came after CMGI had lost $3.5 billion in the past two quarters. And in early July, when Randall Bolten ended a six-year reign as CFO of E-business software firm BroadVision Inc., no explanation was offered. BroadVision's revenue is down significantly from last year and it lost $242.8 million for the quarter ended June 30. Two months earlier, Exodus Communications Inc.'s R. Marshall Case and Lucent Technologies Inc.'s Deborah Hopkins left their CFO posts in the wake of huge quarterly losses for their respective employers. Hopkins reportedly had received a $4 million signing bonus when she joined Lucent just a year earlier after a 16-month stint as Boeing Co.'s chief financial officer.

Cahners In-Stat Group analyst Kneko Burney says the procession of CFO resignations is reflective of the tech sector's return to what she calls "realityland," a place where profits, prudent management, customer satisfaction, and organic growth have replaced the grow-at-all-costs approach that was prevalent in 1999 and 2000. Burney says a lot of financial execs jumped from stable, slow-growth industries into IT because of the allure of stock options and accelerated growth. Many of them, she says, are waking up to the fact that the young companies they joined for a change of pace are now operating more like the industries they left, only without the stable revenue streams. "These are the best and the brightest from other industries," she says. "They're leaving because they're suddenly going, 'This is a bunch of bull.'"