Faltering Internet company Perion Network Ltd. (Nasdaq:PERI: TASE:PERI) has a new CEO. Perion, which develops software and provides services for software and app developers, today announced the appointment of Doron Gerstel, effective in early April, just over two months from now. Gerstel will replace Josef Mandelbaum, who announced his resignation last September after a six-year term, following a struggle by a group of shareholders in the company against management. Perion's business and share price have been going down.
During the transition period between Mandelbaum's leaving and Gerstel's taking up his position, Period CFO Yacov Kaufman will be temporary CEO in order to ensure that the change in CEO will be smooth. Gerstel has over 20 years of experience in senior management in high-tech companies. Before coming to Period, he was CEO of Nolio, Panaya, Zend Technologies, and Syneron Medical Ltd. (Nasdaq: ELOS).
Gerstel said today, "From being a startup specializing in a single product, Perion has become a global technology company in recent years, with over $300 million in revenue from a variety of instruments. I intend to continue on this path, enhance the unique digital advertising capabilities of the Undertone advertising division, and accelerate the company's growth."
Following the shrinking of the company's traditional market of Internet searches, the Perion share price has dropped 68% from the time that Mandelbaum became CEO in 2010 to his resignation announcement in September 2016. The share price continued its decline after the resignation announcement, losing a further 25% of its value by early November. The trend has since reversed, with the share price gaining 60%. The company's current market cap is $120 million.
In recent years, Mandelbaum attempted to diversify the company's business in order to counter the decline of the Internet search sector, on which the company depended through cooperative ventures with major Internet search companies. Mandelbaum's measures included acquisitions. The largest of these was in late 2015, when Perion acquired digital advertising company Undertone for $180 million (more than Perion's $170 million market cap at that time).
The acquisitions made by Mandelbaum and the emptying of the company cash box were one of the shareholders' complaints against him. The shareholders also objected to the remuneration he received despite the substantial fall in the share price. Mandelbaum's salary cost $2.7 million in 2015, most of it capital remuneration.
Perion's revenue rose 49% to $228 million in the first nine months of 2016. The company had a $120,000 net loss during this period, compared with a $52 million loss in the corresponding period in 2015. Perion had $30 million in cash as of the end of the third quarter. The company is scheduled to publish its results for all of 2016 in mid-March.
The activist campaign against Mandelbaum inspired by the decline in Perion's business and share price was led by Ronen Shilo, who owns 11.6% of the company's shares. Shilo became a shareholder in Perion three and a half years ago, when Perion merged with Client Connect, the web toolbar business division of Conduit, which Shilo founded. Between the merger and the beginning of Shilo's campaign, his shares in Perion lost over $100 million of their value on paper.
Shilo was joined in his campaign by Zack and Orli Rinat, owners of 8.5% of Perion's shares, also acquired as a result of the Conduit deal. The minority shareholders demanded a change in the mechanism for selection directors in Perion that would make it easier to replace directors. Following the campaign, a special meeting of Perion shareholders was held. The meeting failed to reach agreement, but Mandelbaum nevertheless decided to resign.
Published by Globes [online], Israel Business News - www.globes-online.com - on January 24, 2017
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