MicroStrategy shares fall on management shakeup

NEW YORK -- Shares of MicroStrategy Inc. fell Tuesday after the business software company shuffled its managerial ranks, prompting at least one analyst to cut his rating for the company.

THE SPARK: Tysons Corners, Va.-based MicroStrategy said Monday that Sanju Bansal will no longer serve as its COO but will remain vice chairman of the company's board, executive vice president and secretary.

THE BIG PICTURE: The move was part of a slew of management changes the company announced in a Securities and Exchange Commission filing. Bansal will be replaced by Bob Watts, the former head of the company's professional services business.

In addition, CEO Michael Saylor stepped down from the role of president and two new presidents were named. They include Jonathan Klein, the company's chief legal officer, and Paul Zolfaghari, MicroStrategy's head of sales until January 2011.

THE ANALYSIS: The moves prompted BMO Capital Markets analyst Karl Keirstead to cut his rating for MicroStrategy to "Market Perform" from "Outperform." He said the removal of Bansal from the COO role is a "big deal, not an incremental change."

Keirstead, who also cut his price target by $20 to $130, noted that Bansal had held the job for 19 years and had served as Saylor's top adviser for a long time.

"We worry that this change could have been a response to weak financial results or industry changes that are forcing MicroStrategy to adjust," Keirstead wrote in a note to investors.

In addition, the analyst said he's worried that spending on traditional business data-reporting software is slowing, which could cut into the company's sales.

THE SHARES: Down $7.73, or 6.4 percent, to $112.25 in afternoon trading, after dipping as low as $107.28 earlier in the day. Over the past 52 weeks, the company's shares have traded between $101.13 and $160.