Greenway Capital Urges Kintera Board to Replace CEO Harry Gruber

DALLAS, Feb. 5 /PRNewswire-FirstCall/ -- Dismayed by thirteen consecutive quarters of losses and continued lack of credible guidance for when the company will become profitable, investors holding 5.8 percent of common stock in enterprise software provider Kintera Inc. (Nasdaq: KNTA - News) have urged the company's board of directors to exercise its fiduciary duty and replace Chairman and CEO Harry Gruber.

In a public filing ( http://www.sec.gov/Archives/edgar/data/1117119/000114420407003797/v063647_sc 13d.htm ) and letter sent to Kintera's board on Jan. 26, Greenway Capital founder and Kintera shareholder Steven Becker stated that he and other investors are "increasingly troubled by Kintera's pattern of losses, progressively dilutive financings, inaccurate guidance, and plunging credibility within the investor community."

Specific concerns in Greenway Capital's letter included the following:

-- Kintera's share price has fallen from a high of $17.29 in early 2004 to
$1.30 as of Feb. 1.
-- The company has an accumulated deficit of $118 million and has been
unprofitable since its initial public offering in December 2003.
-- During several quarterly conference calls, Kintera has issued guidance
predicting profitability, with the subsequent, actual results being
continuing and significant EBITDA losses.
-- The company's annualized revenue per employee ratio of $125,000 is
approximately half that of its small, public-company software peers,
suggesting both a lack of productivity of the company's salesforce and
the inefficiencies of operations following numerous acquisitions.
-- Raising equity through four dilutive PIPE financings, the company's
share count has increased from 12.5 million to 40.6 million since its
IPO. In its latest financing round, equity sold at $1.25 per share, an
82-percent discount off its $7 IPO price.
-- Kintera is exhibiting poor corporate governance by allowing the
Chairman and CEO roles to be held by the same person and which has
resulted in the entrenchment of Mr. Gruber.

The letter concluded, "We urge the Board of Directors of Kintera to act on behalf of Kintera's shareholders and exercise its fiduciary obligation to replace Mr. Gruber with a professional manager who can deliver on the enormous potential that we believe Kintera's targeted markets hold."

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Source: Greenway Capital

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