In a somewhat stunning development, the Dicom Group named Reynolds Bish as CEO this morning. DIR had first suggested this move when Dicom announced it was looking for a CEO late July. Dicom after all has been struggling to get its market capitalization above its annual revenue of $400 million – this despite being fairly conistently profitable and having over $100 million in the bank. Bish built his reputation on raising Captiva’s market cap from less than $20 million in 2002 to more than $200 million by the time the company was sold to EMC for $275 million in late 2005.
Part of the problem with Dicom’s current valuation on the London Stock Exchange where it primarily trades, may be that the company is still perceived as a distributor of hardware products, a business model that clearly isn’t valued very highly by U.K. investors. U.K.-based distribution competitor Headway was recently sold for something like half its annual revenue. As Bish has a background in software, unlike his predecessor as Dicom CEO, Rob Klatell, whose background was closer to distribution, he is a much better choice to distance Dicom from its roots as a hardware distributor.
Dicom broke into the software business in 1999 when it acquired Kofax for $70 million. At the time, Dicom was a $123 million company and Kofax was generating $33 million in annual revenue. Now, software generates approximately 60% of Dicom’s revenue, with Kofax’s document capture business leading the way. Bish’s hiring, and the fact that he will be based in Irvine, the site of Kofax’s headquarters, firmly cements Kofax’s position, as the crown jewel in the Dicom business portfolio. This is a position its held financially for years. It’s good to see Kofax being handed over the adminstrative reins as well.
Check out our exclusive interview with Bish in next week’s issue of DIR.