Aug. 24–If the past is prologue, as historians say, John Mutch wants everyone to know the future also can be shaped by lessons learned.

Mutch, 47, took over last week as chief executive of Peregrine Systems, the San Diego software company that has returned like a prodigal son from a bankruptcy reorganization and corporate accounting scandal.

Mutch, who joined Peregrine’s board nearly six months ago, replaced Gary Greenfield, who directed the company’s turnaround through a nearly 11-month bankruptcy reorganization. Under Greenfield, Peregrine wiped out $509 million in overstated revenue, sold its Remedy subsidiary for $355 million and pared operations to a fifth of what they were two years ago.

For Mutch, it is his second stint as a CEO, having served for roughly two years at the helm of HNC Software, a San Diego company that developed neural networking technologies to detect various types of fraud.

Mutch left HNC last year, after Fair Isaac Corp. of San Rafael acquired the company in a stock buyout estimated at $600 million.

“I certainly have a high regard for John,” said Peter van Cylenburg of Pond Ventures, who served on Peregrine’s board with Mutch for six months. “I think he has the right experience for the job.”

But Peregrine’s new CEO is not an easy person to work for, said Robert L. North, HNC Software’s former chairman and CEO, who hired Mutch as a marketing executive at HNC in 1997.

“People who work for him don’t always love him, I’ve got to tell you that,” North said. “He’s pretty aggressive and confrontational.”

Mutch acknowledged that he’s aware his management style can be abrasive.

“To a negative extreme, I can be an intense, competitive individual,” Mutch said. A former collegiate lacrosse player at Cornell, he says he enjoys competing in the game of business.

“I don’t think he suffers fools,” said Kevin Carroll, executive director of San Diego’s AeA, the trade group once known as the American Electronics Association. “He’s going to get the job done over there with the people who are there, or without them.”

Mutch attributes his hard-driving reputation in part to the fact that he spent eight formative years of his business career in sales and marketing at Microsoft.

“I came out of a company that had hyper-aggressive business practices,” he said.

As the new CEO moves to re-energize Peregrine’s post-bankruptcy business, he is familiar with at least some of the company’s new majority owners.

Under the reorganization that took effect on Aug. 7, bondholders who constituted Peregrine’s biggest group of creditors exchanged their debt for 63 percent of the company’s newly issued stock. They also took four of the new board’s seven seats.

Mutch said he knew two of the ex-bondholders now on Peregrine’s board while he was at HNC.

Ben Taylor, a portfolio manager for Weiss, Peck & Greer, had investments in HNC and Fair Isaac, Mutch said. He also was acquainted at HNC with Carl Goldsmith, a portfolio manager at MW Post Advisory Group in Los Angeles.

Another former bondholder, Mellon HVB hedge fund manager James Jenkins, was named last week as board chairman.

Like Peregrine’s new majority owners, Mutch has emphasized the bottom line saying he intends to maximize shareholder value.

If the past is prologue, Peregrine shareholders might gain some insight by studying the deal Mutch negotiated in last year’s sale of HNC Software, which is still subjected to some occasional second-guessing.

“Obviously, I was disappointed when they sold the company,” said North, who guided HNC’s growth for 12 years before turning the company’s reins over to Mutch. “I thought it should have remained an independent company.”

Mutch maintains that selling HNC was the right thing to do. HNC’s market valuation was roughly $650 million when Mutch took control in late 1999.

Although he sold the company for about $600 million in mid-2002, the overall Nasdaq market had declined by 60 percent over the same period.

“It’s hard to argue with the combined performance of HNC and Fair Isaac,” Mutch said. “At the time of the merger, they had a combined value of $33 a share, which is at $57 a share now.”

For the time being, Mutch says his top priorities at Peregrine are completing the company’s delayed financial statements and getting the stock relisted on the Nasdaq National Market.

Despite the recent departure of chief technology officer Fred Luddy, Mutch voiced confidence in Peregrine’s development team along with the “experienced technology veterans” heading key departments.

“If anything, I would question our capabilities in what I call product and program management,” Mutch said. Against rivals such as Computer Associates and BMC, “which are not known as being customer friendly,” Mutch said he believes Peregrine can make gains by emphasizing customer service.

Apart from his eight years as a sales and marketing executive at Microsoft, Mutch said his business skills were heavily influenced by the master’s in business administration he earned in 1997.

“The real benefit of the MBA at the University of Chicago was the financing background and the underpinnings in financial and economic theory,” Mutch said.

“That formed the cornerstone in my own personal life for my firm beliefs in running a business.”

Mutch joined HNC as a marketing executive that same year.

“One of the things we saw in him at that point in time was a very good ability to see the big picture of market dynamics,” North recalled. “He really helped us to create a strategy around that.”

After a year in marketing, North named Mutch as president of HNC’s Insurance Solutions division, which consisted chiefly of two previously acquired businesses that were not operating well together.

“There was quite a bit of turmoil that had to be straightened out there,” North said.

In a nod to circumspection, Mutch said he also made mistakes at HNC and learned lessons he plans to apply at Peregrine.

Describing himself as an ardent subscriber to Adam Smith’s economic theories, Mutch said he belatedly realized at HNC how important it is to align employees with their own interests.

“People are motivated by different things,” Mutch said. “Some people are motivated by making money. Some people are motivated by the passion of making a product. If somebody is incapable of doing a job, no amount of coaching and no amount of management is going to enable them to do that job. So the best thing you can do is move them to a job they’re suited for.

“What I came to learn through my experience at HNC is you have to have great people. You have to have the right people in the right situation.”

Mary Burnside, who worked with Mutch at HNC as chief operating officer, said she had no problem with his aggressive style.

“From 25 years in the software business in Silicon Valley, I thought John was pretty representative of high-powered CEOs,” Burnside said. “I thought he was normal. But think about Larry Ellison. Think about Bill Gates. None of these guys are known for being ‘Mr. Sweetness and Light.’ ” In the end, Mutch said that by applying the lessons he learned at HNC, he expects people at Peregrine will see him in a year as “a great motivator,” “supportive” and as a “great leader.”

He added: “I know in my heart if I don’t achieve those things that basically I’ll have failed.”

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