Management Turnover as Change Agent

Monday, March 24, 2008

Electronic Arts in Midst of Hostile Takeover Jettisons CFO

John Riccitiello, Electronic Arts' ERTS (NASDAQ) CEO, and according to many analysts the driving force behind EA's controversial hostile takeover attempt of software gaming firm Take-Two, appears to be consolidating his control and management approach to the firm. In a surprise announcement, EA's CFO Warren Jensen, who has had the position since 2002, announced he would be resigning. Jensen's resignation comes shortly after another major change in top management took place recently (appointment of new president and COO). The company provided no specific reason for the CFO change. In the company's press release Jensen said,
“It’s time for me to write the next chapter in my career – and I wish EA the best in the dynamic period ahead.”
Jensen's exit comes at a strange point in the company's circumstances, the hostile takeover bid for Take-Two. While only speculation on my part, Riccitiello who finds himself under increasing pressure as corporate profits continue to remain weak and his takeover bid of Take-Two which has turned hostile has up to this point failed to succeed. He has felt the need to revamp top management to meet his own specific requirements and make certain his underlings remain beholden to him. According to Mark Bruno in Financial Week analyst Doug Creutz of Cowen & Co. said,
it’s likely Mr. Riccitiello—who returned to EA early last year after co-founding venture capital firm Elevation Partners—is simply looking to place his own people on the video game company’s management team. “[Mr. Riccitiello]’s been back for a year now and he may be looking for someone with a different point of view,” said Mr. Creutz. “Jenson was a well-regarded CFO, but Riccitiello may be after someone with more of an innovator’s mind-set.”
It is difficult to figure how this specific management change at this juncture in the company's business makes sense. We will just have to wait and see what transpires with the hostile bid and the company's plans for the future. As it stands for the moment Jensen will remain with the firm for a number of months, so we can assume he still could be helpful with the takeover bid. According to a story in the Financial Times,

...Riccitiello has made several management changes since he succeeded Larry Probst as chief executive a year ago. He has reorganised the company into four different “labels” with separate heads and this month appointed a chief operating officer, John Pleasants, to lead the company’s global publishing operations.

We will just have to wait and see.

Stay tuned.

For more:

Financial Times
Business Journal
The Escapist
Ars Technica

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