(Bloomberg) -- WiseTech Global Ltd. shares tumbled after the tech firm slashed its profit forecast, saying the recent scandals embroiling founder Richard White had delayed a major product launch.
The stock slumped as much as 19% in early Sydney trading Friday after the company lowered its full-year Ebitda projection to a range that’s below the average analyst estimate.
The tech software company was roiled by a series of claims against White last month — including that he’d paid millions of dollars to a former partner to settle allegations of inappropriate behavior and gifted a A$7 million ($4.6 million) house to a former employee he had a years-long relationship with — that culminated in the billionaire stepping down as chief executive officer. He will remain as a consultant to the company on a 10-year contract carrying the same A$1 million annual salary he had as CEO.
In his address to shareholders at the company’s annual meeting on Friday, Chairman Richard Dammery acknowledged the damage caused by the cascading scandals.
“For three solid weeks, intense scrutiny was brought to certain aspects of Richard White’s private life,” Dammery told shareholders at the company’s annual meeting Friday. “The board is disappointed that the diversion of Richard White’s attention away from product development at a critical juncture has impacted the timing of the release of some of the three breakthrough products.”
However, an external investigation has cleared White of allegations he failed to disclose numerous personal relationships to the board, misused company funds to pay for plastic surgery, and bullying.
The investigation, carried out by law firm Seyfarth Shaw, found he had disclosed his personal relationships to the board and hadn’t used company funds to pay for plastic surgery in 2019 or accommodation and travel to New York for a former partner, the company said in a seperate statement Friday.
While claims of bullying and intimidatory behaviour raised by former director Christine Holman weren’t substantiated, the probe found White has a “direct” approach consistent with a process of “creative abrasion” that some managers may find uncomfortable and confronting, particularly in group settings.
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WiseTech shares — and White’s personal wealth — have been on a rollercoaster ride as the scandals unraveled. The shares slumped around 30% before White stepped aside on Oct. 25, before recovering all those losses in the past month and hitting a record high on Thursday.
The firm’s full-year Ebitda forecast was reduced to a range of A$600 million to A$660 million, from a previous guidance of A$660 million to A$700 million. Even the top of the new range is below the average analyst forecast of A$684.5 million. The stock pared early losses and traded 11% lower at 11:01 a.m. in Sydney.
Dammery also defended White’s new role, in which he will report directly to the board.
“It is far from unprecedented in technology companies for a founder to remain long-term in the company they built,” Dammery said. “Richard’s extraordinary strengths relate to his long-term vision, his ability to see problems in ways that other don’t – and to imagine solutions to these problems – and his uncanny ability to ‘join up’ things that, for others, might look separate. In his new role, WiseTech will lose none of these things.”
(Adds earnings forecast from second paragraph.)
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