Mercury Interactive has optimization problem

Mercury Interactive, the company that pioneered business technology optimization, is now reeling from the resignation of top executives, who were found to be 'aware' of stock option irregularities (supposedly manipulation of stock option grants dates to reduce tax liabilities). It turns out that in most cases the date changes resulted in more favorable pricing of the options. The stock has plunged, Chairman & CEO Amnon Landan resigned (replaced by Tony Zingale, who was promoted from president and COO) and the company is in danger of delisting on NASDAQ. Landan was named named Forbes' entrepreneur of the year in 2003, and has been with the company since 1989.

This is a company that has been on a serious roll, growing revenue 35 percent in 2004 to more than $685 million. First quarter revenue for 2005 was $198.8 million for the first quarter of 2005, an increase of 27 percent compared from the first quarter of 2004. Second quarter revenue was $207 million, and third quarter revenue is projected above $200 million. The company is just in the process of shipping an integrated BTO suite the integrates its IT governance and application performance and management products. 

The company is obviously taking a major market hit, but Zingale, who joined the company in December 2004, should be able to weather this storm. He was formerly president of Nortel Networks eBusiness Solutions Group and CEO of Clarify, which is now part of Computer Associates. However, now Mercury will have to work extra hard to prove to customers and Wall Street that the current "optimization" problem is not systemic and just a temporary blip that has been addressed...