- The Washington Times - Monday, November 15, 2004

A shake-up at BearingPoint shows that the company is trying to reposition itself to compete more effectively for commercial customers in the tough information technology consulting business.

The McLean company’s chief executive officer, Randolph C. Blazer, resigned last week after leading BearingPoint through an initial public offering and major acquisitions. He had been in charge since April 2000.

He was replaced by Roderick C. McGeary, a member of the company’s board of directors.

Mr. McGeary credited Mr. Blazer with “growth of the company into a global organization.”

Moody’s Investor Service placed BearingPoint’s debt under review in May after it reported that first-quarter earnings fell 61 percent.

“BearingPoint faces many challenges, chief among them is the mediocre management of its work force,” David Togut, industry analyst for the Wall Street investment firm Morgan Stanley, said in research note.

However, he said the change in chief executive officers “may improve the financial performance” of BearingPoint.

The company continues to operate a strong federal contracts business but must compete for private sector contracts with industry giants such as IBM, Accenture and InfoSys Technologies.

Government contracts are “really the big enchilada in our portfolio mix,” said John Schneidawind, the company’s spokesman.

Under the leadership of Mr. McGeary, BearingPoint plans to focus more on financial services for banks, insurance companies and brokerage houses.

“He wants to bring our commercial sector up to par with our public sector,” Mr. Schneidawind said.

The company carries about $220 million in debt from acquisitions, such as the consulting businesses of Andersen Business Consulting and German auditing firm KPMG DTG. It has nearly 16,000 employees in about 40 countries.

Its contracts include a $229 million deal to integrate operations of federal agencies incorporated into the Homeland Security Department and a $240 million contract to help establish a new currency and market economy in Iraq.

However, BearingPoint officials also are being forced to explain their actions to the government.

A Veterans Affairs Department inspector general’s report said a contract given to BearingPoint without competitive bidding was “tantamount to issuing BearingPoint a blank check.” The company ran up $116 million in costs to install a new computer system.

Nevertheless, Bill Loomis, analyst for the financial firm Legg Mason Wood Walker, said the outlook for BearingPoint indicated “healthy growth.”

BearingPoint changed its name from KPMG Consulting and went public in February 2001 after splitting from tax and auditing firm KPMG LLP a year earlier.

The company earned $11.9 million, or 6 cents per share, in the third quarter of this year, compared with a $39.2 million loss, or 20 cents per share, in the third quarter of 2003. About $330 million of its $841 million in revenue, and 55 percent of pre-tax profit, came from government contracts.

BearingPoint confirmed its guidance for the fourth quarter of this year of an expected $850 million to $870 million in earnings, or 9 cents to 11 cents per share.

Its stock closed at $9.68 per share yesterday on the New York Stock Exchange, down 0.82 percent from its Friday close.

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