Kintera Inc.
(NYSE:KNTA) shares moved down marginally after Coghill Capital
Management disclosed a ten percent stake in the company and expressed
its support for a change in the role of chief executive officer.
The
activist hedge fund said in a letter, "In our view, Harry's track
record with respect to managing Kintera has demonstrated an ongoing
inability to achieve business goals and objectives resulting in
destruction of shareholder value, as well as the squandering of a
considerable market opportunity for which Kintera's solution is well
suited to take advantage of. Kintera's lack of acquisition integration
and cost rationalization have led to massive and ongoing losses
necessitating several equity financings that have been significantly
dilutive to existing shareholders. Unrealized performance projections
and consistent cash burn have caused the investment community to become
disenchanted; as evidenced by Kintera's current $1.30 stock price (as
of close on February 5, 2007), which is a fraction of the Company?s
$7.00 per share IPO price in 2003.
As Harry is both the Chairman and Chief Executive of the Company, we
are
concerned that he has the ability to exert undue influence over
strategic and operational decisions without meaningful checks and
balances. Further, as we view a certain level of dialogue between
boards of directors and investors to be important and constructive, we
are especially concerned with Kintera?s policy of prohibiting
independent board member communication with the investment community.
In this particular case, we view such communication to be key to
catalyzing change and we support Harry's replacement with a
professional manager as a necessary step to drive Kintera to sustained
profitability."
Clearly, a new chief executive could help turn
around the company and prevent any further deterioration in value. A
turnaround CEO could even help the company further its objectives and
improve its condition. Combined, these factors make KNTA a stock
worth watching!
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