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Highlights:
- Stock Slump: Shares of WiseTech drop 19% following profit forecast reduction.
- Profit Downgrade: Full-year EBITDA forecast lowered to A$600 million-A$660 million, missing analyst expectations.
- Founder Scandals: CEO Richard White's scandals led to product delays, though an investigation cleared him of certain allegations.
Shares of Australian tech firm WiseTech Global Ltd (ASX:WTC) plunged as much as 19% in early Sydney trading on Friday after the company revised its full-year EBITDA forecast downward. The company’s new projection of A$600 million to A$660 million falls short of the previous guidance of A$660 million to A$700 million and below the average analyst expectation of A$684.5 million. The profit warning came alongside the acknowledgment that the recent controversies surrounding founder Richard White had delayed the release of key product launches.
The scandal surrounding White intensified last month, with allegations that he had paid millions of dollars to settle claims of inappropriate behavior and gifted an A$7 million house to a former employee with whom he had a long-standing relationship. These revelations led to White stepping down as CEO on October 25, although he remains with the company in a new role as a consultant with a 10-year contract at the same A$1 million annual salary. The move came after WiseTech’s stock experienced a 30% drop, although it had rebounded recently, even hitting a record high just a day before the profit warning.
During the company's annual shareholder meeting, Chairman Richard Dammery addressed the impact of White’s scandals, acknowledging that the distractions had harmed product development at a critical time. He stated that White’s personal issues had diverted his attention away from overseeing the timely launch of three breakthrough products. This delay in product releases contributed to the revised financial forecast and the significant drop in share price.
However, an external investigation, conducted by the law firm Seyfarth Shaw, cleared White of several allegations. The inquiry found no evidence that he failed to disclose personal relationships to the board or misused company funds for personal expenses like plastic surgery or travel. Furthermore, the investigation found that claims of bullying and intimidating behavior by White, raised by former director Christine Holman, were not substantiated. The investigation did, however, acknowledge White’s “direct” management style, which some employees may have found uncomfortable but described as a process of “creative abrasion” used to generate solutions.
Despite these controversies, Dammery defended White’s continued role within the company, emphasizing that it is not uncommon for founders to retain long-term involvement in technology firms they created. He praised White’s visionary strengths and unique problem-solving abilities, asserting that the company would continue to benefit from his insights in his new capacity.
WiseTech’s stock, which had recently rebounded following White’s departure as CEO, closed 11% lower after the profit revision. Despite this, the company’s leadership remains confident in the long-term vision, with Dammery reaffirming that WiseTech would not lose any of White’s key contributions in his new role.
In conclusion, while WiseTech continues to face challenges related to internal scandals and delayed product launches, the company’s future will likely depend on its ability to recover from these setbacks and execute its product roadmap effectively. The revised financial guidance and ongoing scrutiny of White’s personal and professional conduct have raised questions about the firm’s near-term performance, though its long-term prospects remain in focus.
