Rocked by a bookkeeping scandal that forced out its top executives 15 days ago, Platinum Software Corp. tried to stabilize its operations Tuesday by naming a permanent chief executive and hiring a new chief financial officer.
Carmelo J. Santoro, a Platinum director doubling as acting chief executive, decided to take the permanent chief executive’s job in part because he now plans to recruit a chief operating officer to run day-to-day operations.
In addition, the company named Michael Simmons, 47, as chief financial officer. Simmons, who has 20 years of financial planning experience, was a colleague of Santoro for six years at Silicon Systems Inc., a Tustin computer chip maker.
Platinum has been in turmoil since April 18 when it reported that flawed bookkeeping had resulted in errors that overstated revenue by as much as $10 million for the past 15 months.
Santoro, 52, replaces founder Gerald R. Blackie and Simmons replaces Jon Erickson. Two others, Timothy McMullen and Kevin P. Riegelsberger, resigned their positions as executive vice presidents. But, Santoro, said, they continue to work as employees on Platinum’s operations committee, which runs daily company affairs while the search for a chief operating officer continues.
“I think it’s good they have a new management team,” said Frank Michnoff, analyst for Prudential Securities Research in New York. “I would say they still have a big task in front of them to turn this company around.”
Industry analysts say the person who becomes chief operating officer, a new post at the company, will be key to Platinum’s future.
The new executives will proceed with previously announced plans to restructure Platinum and to reduce its worldwide staff of 820 employees to an affordable level in light of its revised revenue expectations. They must also deal with potential customer defections, pending shareholder lawsuits alleging deceit and an expected investigation by the Securities and Exchange Commission.
Santoro said that Platinum has good opportunities to develop new accounting software technologies for computer networks and that he believes he can help turn the company around.
“I can contribute things to the company to determine its strategic direction,” said Santoro, who has served as chief executive at local high-tech companies such as AST Research Inc., Ashton-Tate and Silicon Systems.
Michnoff said Santoro probably realized it would be easier to run the company himself than to persuade skilled candidates to take the helm.
“In all likelihood, the restructuring will be done before the chief operating officer gets here,” Santoro said. “The restructuring could happen in the next few weeks. I think it was a great accomplishment to get the chief financial officer on board quickly.”
He praised Simmons as a good long-term strategist and a good crisis manager.
Simmons had worked with Santoro at Silicon Systems but left in 1986 to join CPG International, an Irvine holding company that owned graphics supplies and office furniture businesses. It was created in 1986 as a result of a $55-million leveraged buyout of several businesses.
After leaving CPG in 1989, Simmons became executive vice president, chief financial and administrative officer of Dynasty Classics Corp. in Carson, a maker of commercial lighting products. He left that position in November.
A former Marine who served in Vietnam for three years, Simmons grew up on the East Coast and earned a master’s degree in business administration from Rutgers University in 1971.
Simmons said he will try to report Platinum’s financial situation to the SEC before a May 16 deadline for the company’s next 10-Q, or quarterly financial statement. But he said the company would only do so if it is ready to report all of its expected revenue revisions and restructuring costs at that time.