Former Magic CEO Sues as iBOLT Sales Channel Widened
May 13, 2008 Alex Woodie
Former Magic Software CEO and president Eitan Naor will be in Israeli court today in an attempt to regain his position following his abrupt dismissal last month. Naor, who was hired less than a year ago as part of an executive shake-up at the troubled software vendor, was ousted in late April following a disagreement with the board. Meanwhile, the company tried its best to move forward by announcing that its iBOLT integration software can now be purchased online at Salesforce.com‘s AppExchange marketplace.
Magic announced April 30 that Naor was no longer acting as its CEO and chairman. That pronouncement came two days after a decision in Tel Aviv Labor Court denying Naor an ex parte request for relief, which Naor had filed about two weeks earlier. Naor was seeking a temporary order against Magic and its chairman, Guy Bernstein, that would prevent the company from suspending him, firing him, or demoting him from his position as president, CEO, and a director on Magic’s board.
Last week, Naor filed another request for relief with the labor court, and also asked the court to reinstate him to all positions he held with Magic. A hearing is scheduled for today.
The source of the disagreement between Naor and Magic’s board was not immediately obvious based on information provided by Magic. Magic’s Web site was experiencing malfunctions yesterday that prevented its press release archive from being accessed.
A glimpse into the goings-on was provided by Globes Online, an Israeli business publication. The publication reported that Magic’s board asked Naor to leave the company “quietly” on the eve of the Passover holiday because Naor was perceived as disloyal to the company and was seeking employment elsewhere. Naor is disputing those allegations.
Globes goes on to say that Naor received no warning from the board about his imminent dismissal, and received no indication that it was in any way unhappy with his performance. Naor’s lawyer described his ouster to Globes as “an unprecedented act of thuggery and trickery.”
Naor was hired as Magic’s president and CEO in 2007 as part of a company reorganization and executive overhaul that also saw the hiring of chief financial officer David Zigdon and vice president of global marketing Arita Mattsoff, and the promotion of Bernstein from CFO to chairman of the board.
Magic has been trying to jumpstart its business since it launched its restructuring plan in October 2006 following the posting of its second straight quarterly loss. Since then, the company has made solid progress in returning to profitability.
Despite four straight quarters of profitability, Magic’s stock, which is traded on the NASDAQ, has not faired well since Naor took the helm, dropping from around $2.40 per share last July to about $1.65 currently, a decline of more than 30 percent. Some of that investor apprehension could be due to the fact that Magic restated earnings on December 31, 2007. And earlier this year, the company was a week late reporting its fourth quarter results ended December 31. Magic attributed the delay to “various routine procedures” in the preparation of its annual report.
Magic is due to report its financial results for the first quarter ended March 31 soon. Last year, the company reported first quarter results on May 14. Normally, Magic would warn investors a week or more before its results are posted, but it hasn’t done that yet for its most recent quarter.
Despite the turmoil in the ranks of Magic leadership, the company is forging ahead with product plans. Last week Magic announced that its iBOLT application integration tool–which is largely based on Magic’s fourth-generation language (4GL) development environment, eDeveloper, and adds to that a collection of connectors and adapters for hooking into various systems, including i OS (formerly i5/OS)–is now available for sale on Salesforce.com’s AppExchange online marketplace. The company hopes to make money selling iBOLT to customers that need to connect their existing computer systems to Salesforce.com’s hosted CRM offering.