The Denver-based firm, which announced Massingill's resignation Friday, said it has reappointed founder C. Edward McVaney to the post of president and CEO, immediately replacing Massingill. McVaney, who served as CEO from the company's inception in 1977 until November 1998, will also remain chairman of the board, J.D. Edwards said in a statement.
The company did not disclose a reason for Massingill's abrupt resignation except to say that McVaney is "looking forward to working closer with the rest of the management team on day-to-day operations."
The news sent J.D. Edwards' stock sliding, closing down $6.44 to $23.38. Rivals Oracle, SAP, PeopleSoft and Baan were also in the red. The firms develop enterprise resource planning (ERP) software, or applications that manage a company's manufacturing, human resources and accounting needs.
Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Berkeley, Calif., said news of Massingill's resignation was "shocking" and said the company has a tough road ahead of it, especially in proving to critics that it has successfully shifted its focus to the Internet.
"He's hardly into his tenure as the theoretical turnaround person, so it's a little shocking that he'd leave," he said. "He was the new blood that was going to lead J.D. Edwards into the promised land (of the Internet), which was clearly his mandate. He fell short of fulfilling that mandate...Massingill has not produced the kind of results for the company that people thought he would."
Greenbaum added that the company's decision to reappoint McVaney sends a mixed message.
"On the one hand, (McVaney) provides continuity and stability and tremendous reassurance to the existing customer base, which is very important at any company at a time when uncertainty strikes," he said. "But, on the other hand, he's the same guy that couldn't execute a leadership strategy two years ago" to reposition the firm to address the Internet and business e-commerce.
As sales of its flagship ERP software continued to slow, J.D. Edwards joined its competitors in the race to grab new revenue opportunities in areas such as business e-commerce and customer relationship management (CRM) software, which automates a company's sales, marketing and customer call-center needs.
In the past year, J.D. Edwards has been struggling to reinvent itself for the Internet and has faced sagging financial results. Like its rivals, the company has shifted research and development efforts to the Internet, announcing partnerships with software makers Siebel Systems and Ariba to resell their Web-friendly applications in an effort to move aggressively into the CRM software and business e-commerce markets, respectively. More recently, the company has seen an upside in its financial results.
Last quarter, the firm posted first-quarter earnings of $3.6 million, or 3 cents per share, surpassing Wall Street estimates. Analysts surveyed by First Call projected the company would report a loss of 2 cents a share.
"This is a company that has really lacked in the Internet," Greenbaum said. "J.D. Edwards has not been a flashy buzzword-of-the-week type of company (in its marketing efforts). But, that old economy thinking doesn?t work anymore, which is one of the reasons why J.D. Edwards has been hurt in the marketplace in the last six months."
Dave Girard will remain chief operating officer, and Rick Allen will remain chief financial officer, the company said.
Massingill, who was appointed CEO two years ago, formerly served as chief operating officer.