Spectranetics stock tumbles after firings

0 Comments | Gazette, The (Colorado Springs), May 14, 2002 | by Chris Walsh

Shares of Colorado Springs-based Spectranetics Corp. plunged 18 percent Monday as investors reacted to the medical device company firing its top two executives.

Spectranetics, which trades on the Nasdaq under the symbol SPNC, fell 66 cents Monday to $2.91, its lowest closing price since November.

The company's stock had not traded since the firm's board of directors fired Joseph Largey, president and chief executive officer, and Paul Samek, chief financial officer, Friday afternoon.

The firings came days after Largey, Samek and four other executives publicly backed a move to replace the company's chairman and another director.

A Spectranetics shareholder, Steven Sweet, is soliciting votes from other shareholders to replace Chairman Emile Geisenheimer and John Schulte, a director since 1996, with two other businessmen at the company's June 4 annual meeting in Colorado Springs.

Geisenheimer, now acting CEO, said the management shake-up had nothing to do with the board election and that the board has long- running problems with Largey and Samek. He said the two executives have a different vision than the board about how to run the company and have not carried out the board's strategies.

Although Spectranetics has been profitable for four consecutive quarters, Geisenheimer said several plans the board suggested - and which proved successful - initially were rejected by Largey and Samek. Geisenheimer also said Largey entered unprofitable businesses against the board's advice.

Neither Largey, who is a board member and had been president and CEO since 1997, nor Samek could be reached for comment.

Ernie Andberg, vice president/senior analyst with brokerage firm Miller Johnson and Steichen Kinnard in Minneapolis, downgraded the company from a "buy" rating to "neutral" because of the uncertainty surrounding the firm's future.

Andberg said he thinks Spectranetics still has the ingredients to be successful.

"It's disconcerting that the CEO and CFO are gone, but the core of operations executives are still there running the company, making sure things are getting done," Andberg said. "And that's what's important on a day-to-day basis."

Sweet, a 52-year-old investor who owns 176,000 Spectranetics shares, said he remains confident shareholders will oust the two board members.

He says Geisenheimer has accepted excessive amounts of Spectranetics stock options and has received thousands of dollars in consulting fees from the company, despite the firm's lackluster performance on Wall Street during the past few years.

"We will win," Sweet said. "This will be a landslide. ... I would be surprised if we didn't win by over a 10-to-1 margin."

Sweet plans to file updated preliminary proxy documents today with the SEC that ask shareholders to vote on whether Largey and Samek, who own 10 percent of the company's stock, should be reinstated. Sweet recently set up a Web site, www.sweetproxy.com, to promote the issue.

Meanwhile, Geisenheimer said Spectranetics is back to business as usual.

"Our first priority is to make certain that everything at the company is pretty stable and status quo, and I think we've achieved that since Friday."

He said there will be no further firings or layoffs related to the management change.

Geisenheimer runs an investment firm in New York and has been on Spectranetics' board since 1990. He became chairman in 1996 and led a venture capital financing round for the company.

Spectranetics is now looking for a replacement CEO and CFO.

The company, founded in 1984, employs 140 people and develops lasers used for breaking up blockages in arteries and removing pacemaker leads.

- Chris Walsh may be reached at 636-0162 or chrisw@gazette.com