The Quindell PLC (LON:QPP) (OTCMKTS:QUPPF) can of worms may be moving to a new stage of life as the controversial British IT outsourcing and consultancy firm announces a shakeup at the top, hitting a key person at the center of accusations damming the company.
Quindell PLC (LON:QPP) management shakeup
Quindell PLC (LON:QPP) (OTCMKTS:QUPPF) announced that its CEO and Chairman, Robert Terry, would be replaced at CEO by Robert Fielding, currently head of Quindell’s services unit.
The move is significant since part of the original charges brought by an upstart New York City research firm claimed odd dealings between the company’s ownership and contracts with related companies. Terry was said to be at the center of this controversy and may have given contracts from Quindell PLC (LON:QPP) (OTCMKTS:QUPPF) to a private company he benefited from, is speculation that could be the source of an investigation.
Moving Terry out of the way could lead to a rebound, if management can back up its claims in regards to revenue. A key claim in the Gotham City Research which initially sent the stock tumbling is that the sales and revenue numbers were questionable.
Quindell expects strong operating cash flow
In a Reuters report, Quindell PLC (LON:QPP) (OTCMKTS:QUPPF) said it expects strong operating cash flow to wrap of the final quarter, painting a positive revenue picture. The company said it expected to meet earnings expectations
“There have been some questions about the operating cash flow of the company,” Daniel Stewart analyst Sophie Blandford said in the Reuters report. The happy talk continued as the company said their legal services unit ranking was pulling in revenue to the tune of $846,000 per day in the second quarter. This was, however, a backward looking number.
Looking forward the company said it is signing new contracts and extending existing ones, which could add 250 million pounds to the bottom line.
The stock market cheered the news, as Quindell PLC (LON:QPP) (OTCMKTS:QUPPF)’s AIM-listed shares shot up 7 percent. For long term investors, such as the UK hedge fund Polygon, a long term investor, the short term increase in stock price might provide some comfort after the steep, nearly 50 percent decline in the stock price since Gotham released their report on April 22. But the real cheer for investors, particularly the new variety who are sensing a buy on a drawdown opportunity, the key point of what was considered “questionable transactions among related parties” may be out of the picture in day to day operations, but he still remains the firm’s chairman.
As w have noted, Quindell has been a battle ground stock – with prominent shorts and longs betting for and against the company.