L&H replaces CEO amid lawsuits and shareholder concerns

L&H replaces CEO amid lawsuits and shareholder concerns

Head of Healthcare Solutions named chief exec

Facing several class action lawsuits and questions concerning revenue from its Korean business, Belgian firm Lernout & Hauspie announced that long-time president and CEO Gaston Bastiaens has stepped down. John Duerden, formerly president and CEO of Dictaphone and L&H’s Healthcare Solutions Group (HSG), will take on leadership of the speech technologies firm. Robert Schwager, who served under Duerden as general manager of Dictaphone’s healthcare business and L&H HSG, now takes over as president of L&H HSG. Bastiaens remains as a board member.

Bastiaens had come under fire in recent months for focusing on growing L&H’s business through acquisitions rather than concentrating on its core speech recognition products. In fact, the company has been broadening its technology base in the face of stiff competition in the speech and voice technologies field, where the major players include IBM, Nuance Communications, SpeechWorks, and Philips Electronics.

Duerden plans to focus on better integrating Dictaphone and Dragon Systems into L&H’s operations (HNN 4/5/00). Dictaphone and Dragon Systems are among half a dozen companies acquired by L&H in the past year. Industry sources estimate that L&H achieved a 60% share of the $6 billion medical transcription market through the Dictaphone acquisition. Dictaphone’s healthcare division accounted for $11.2 million of the company’s $155 million in revenue for second quarter 2000.

Overall, L&H sales have fallen off everywhere except Korea. U.S. revenue totaled $48.2 million for second quarter 2000, up from $18.7 million in second quarter 1999, but the increase was attributed to revenue from Dictaphone and Dragon Systems. In addition, L&H stock has lost more than half its value since reaching a 52-week high of 72.5 in early spring. The stock closed at $29.75 per share on Aug. 30. In addition, the firm filed a shelf registration statement with the Securities and Exchange Commission in early August to sell up to $250 million in stock to pay off bank debt and provide working capital.

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