Hypercom’s CEO Steps Down Amid Restructuring Moves

It's the summer of change in the executive suites of some major payment-industry companies. Two days after No. 1 processor First Data Corp. named a new chief executive, struggling payment-terminal manufacturer Hypercom Corp. announced that William Keiper, its chief executive for not quite two years, would leave his post Aug 15. Keiper also is resigning as a company director effective the same date. An interim, three-member “office of the chairman” will govern Phoenix-based Hypercom until the board of directors names Keiper's successor. The change triggered speculation in the payments community about whether Keiper was forced out as Hypercom battles increasingly tough competition from France-based Ingenico Group and San Jose, Calif.-based VeriFone Holdings Inc., which last year bought another major terminal maker, Lipman Electronic Engineering Ltd.. “They [Hypercom] are on a downward trajectory in terms of market share,” says Nick Holland, senior analyst at Boston-based research firm Aite Group LLC. “The move probably reflects shareholder dissatisfaction.” In a release announcing the changes, board of directors chairman Daniel Diethelm said Keiper “served Hypercom well.” But the statement went on, “With many of the tough and critical steps behind us, we now all believe it is time for Hypercom to be led by a person who can take the company to the next level in terms of its sales and marketing success in the marketplace, and ideally, with experience in the payments business.” A Hypercom spokesperson tells Digital Transactions News “it would be inaccurate to say that the board asked Will to step down.” Keiper, who joined Hypercom's board in 2000, served as interim CEO for five months after his predecessor, Christopher Alexander, retired in March 2005. Although the Aug. 30, 2005 release announcing Keiper's appointment gave no indication that his tenure would be short, “This was always the plan,” the spokesperson says. “He came in to help restructure the business, and much of that is done. There was always a transition plan in place.” Hypercom, which derives about two-thirds of its revenues outside the U.S., has lost money in three out of the past five years. The firm posted a net loss of $2.53 million in the first quarter although revenues grew 6% from a year earlier to $64.8 million. Meanwhile, Hypercom's mid-afternoon share price of $6.16 is 36% off its 52-week high of $9.70. In late June, Hypercom detailed major changes in its sales, marketing, manufacturing, and supply-chain operations, some new and some already under way. The initiatives include outsourcing manufacturing to third-party contractors and consolidating software development to Singapore, Latvia, and India while reducing development activities now done in the U.S. and Sweden. Hypercom recently moved its U.S. repair and servicing operations from Phoenix to Hermosillo, Mexico. The company also sold its headquarters facility and will move to a smaller space in Phoenix. The new office of the chairman is comprised of Diethelm; Philippe Tartavull, president and newly appointed chief operating officer; and Thomas Liguori, chief financial officer. Tartavull, the former president of Oberthur Card Systems USA who joined Hypercom as a director last year and became president in February, will continue to oversee day-to-day operations. Liguori is charged with completing the supply-chain initiative. Keiper will assist him under a consulting arrangement, Hypercom said. The company also appointed a senior executive from The Western Union Co., Ian Marsh, to its board. Marsh is executive vice president and managing director of Western Union's Asia Pacific region. Diethelm said Hypercom would be looking at both internal and external candidates to fill the chief executive post. On Tuesday, Greenwood Village, Colo.-based First Data named Michael D. Capellas to succeed retiring CEO Henry C. “Ric” Duques (Digital Transactions News, July 10).