After a turbulent few months for Irvine, California firm Platinum Software Corp, its UK managing director, Ron Drake, is predicting it will bounce back at year-end. He said Platinum has $17.4m in cash, no long-term debt, deferred revenues of $15.9m and, if the third quarter’s restated figures were any indication, then the year-end should show revenues of $40m, growth of 80%. Even during a period of uncertainty for the company, in the UK alone it did ?2m of business during June and won 11 new orders, Drake added, and it has just opened its first office in Russia. Platinum is also delighted at having settled, earlier this month, the class action pending against it in the US for a mere $2m in cash and $15m in debentures which it can pay off over the next five years. Drake said: Platinum has been through a lot of trials and tribulations, but that’s behind us. We really do believe that Platinum can go forward now. Platinum has a new chief executive, Carm Santaro and chief operating officer, David Proctor, who joined at the beginning of the month. It has restructed its operations and is committed to its original core business, financial systems, which it says is growing, especially in the client-server market. Its core markets will be North America, the UK and the rest of Europe. Platinum’s visible problems arose when it brought in auditors Ernst & Young as part of its defence against a class action and they refused to sign off the third quarter results in March. Its retained accountant Arthur Andersen then withdrew approval of the previous seven quarters’ returns, which put the company in violation of Securities & Exchange Commission requirements and the Commission launched an investigation. Founder and chief executive Gerald Blackie, and chief financial officer Jon Erickson, resigned earlier this year. The Commission is still investigating Blackie and Erickson’s role at the time of the flotation, according to Platinum and Drake said that although the company, under American law, would not have to face another class action it did not mean that ex-employees might not be sued or prosecuted. But even before the scandal broke, Platinum had over-extended itself, having been on a buying spree using money raised by its flotation in 1992. This year it had to lay off 37% of its staff, the majority of whom worked for the acquired companies, to reduce costs and has since divested itself of most of the companies it bought although it is retaining a seat on the board of each company. This has reduced operating costs by a third. In explaining the scandal it is keen to point out it believes it is the victim of differing perceptions of how a company should manage its accounts, US lawyers’ business practices and a chief executive who pushed a company too far. Platinum, by retaining a share in the companies of which it has divested itself, says it will be able to bring their products to market but without the financial commitment.
