People – January 2005
Charles Peters traded old-line for high-tech. But the transition from chief financial officer of Burlington Industries — now part of Greensboro-based International Textile Group — to CFO of Raleigh-based Red Hat Inc. isn’t his biggest challenge. The company, which sells and services the Linux computer-operating system, is struggling to regain investors’ confidence. Its stock was off more than 50% in mid-November from its four-year high of $29.06 in June.
The decline started with the resignation of Peters’ predecessor, Kevin Thompson, followed by the announcement that first-quarter revenue had missed analyst estimates. It continued in July when Red Hat said it would restate earnings for the previous three fiscal years.
“When the restatement was complete, it should be noted that there were no major changes,” says Peters, who joined the company in September. Net income for the fiscal year that ended in February 2004 was $13.7 million, down from $14 million. Fiscal 2003’s net loss went from $6.6 million to $6.7 million, and fiscal 2002’s net loss dropped from $140.2 million to $140 million.
Still, investors haven’t flocked back to Red Hat, one of the most-scrutinized high-tech stocks on Wall Street. Analysts estimate revenue for the fiscal year ending in February will hit $200 million, up about 59% from the previous year. But Red Hat projected third-quarter revenue below their estimates and didn’t give earnings guidance, citing Peters’ inexperience with the company. Peters, 52, is part of a management team CEO Matthew Szulik has hired to help the company grow and expand into international markets. During the last year, it has added an executive vice president of worldwide operations, a vice president of client services and new counsel.
A Cincinnati native, Peters grew up in Boston and attended the University of Massachusetts, where he played basketball with future Hall of Famer Julius Erving and University of Louisville coach Rick Pitino. When he was a sophomore in 1971, UMass lost 90-49 to Carolina in the first round of the National Invitation Tournament in New York. “Erving fouled out, and they threw me into the game,” the 6-foot-7-inch Peters says. He had three rebounds but didn’t score. UMass faced Carolina again two years later in the NIT, losing 73-63. Peters had four points and three rebounds.
After earning a bachelor’s in accounting in 1973, he worked nine years for Price Waterhouse in Boston and London. He got hands-on experience with high-tech when he joined Concord, Mass.-based hardware and software maker GenRad Inc. He became CFO in 1985.
Peters joined electric utility Boston Edison Co. in 1991 as senior vice president of finance. He became Burlington CFO in 1995, spurred by his wife — a cousin of former Raleigh Mayor Paul Coble — to move closer to her family.
His work in the international operations of GenRad and Burlington should help Red Hat as it expands to China and India. “I was looking for a new and different opportunity. Red Hat has to be one of the most exciting technology stories in the country at the moment.”