Management Turnover as Change Agent

Tuesday, March 29, 2011

RealNetworks CEO Leaves in Midst of Turnaround

In what many analysts consider a surprise, Bob Kimball, RealNetworks' CEO and a real force in turning the troubled company in a new direction after little more than one year has abruptly resigned. So far, Kimball has not really commented on his move. According to the firm's press release outgoing CEO Kimball stated:

I took on this role to lead a restructuring and transformation of RealNetworks into a more lean, efficient and effective business and we have completed that phase of RealNetworks’ transformation. Over the past year we have simplified our business, removed more than $70 million in annualized operating expenses and created an entirely new, award-winning product called Unifi. We are delivering on our promise to build products people love. All this work has set the stage for Real to embark on its next phase with a clean bill of health and a strong foundation.
After 12 amazing years at Real, it is time for me to find new challenges and opportunities. I want to thank the Real team for their incredible work over the past 15 months – we’ve come a long way in a short time and I look forward to watching their success in the coming years.

In the meantime, until a permanent CEO is selected, RealNetworks appointed Executive Vice President Mike Lunsford to serve as interim CEO. The move change in leadership comes at a delicate moment in the firm's turnaround. Kimball who had been with the firm for over a decade before becoming its CEO replaced Rob Glaser, the company's founder. While in his leadership role Kimball according to a story by Brier Dudley for The Seattle Times,

The move comes as Real enters an intense several years that will test its plan to operate as a smaller company more focused on phone companies and other business customers, as well as games and consumer products.

During Kimball's tenure, the company also developed a new online media service that may compete with upcoming products from Google and Apple. But Real's stock has bobbed below $4 for most of Kimball's time as chief executive.

During 2010, sales fell 29 percent to $401.7 million and the company reported an operating loss of $34.5 million. Its gross margin improved to 64 percent, up from 60 percent the year before, when it lost $237.2 million.

All indications point to the firm finding a new CEO from outside the firm. Investors should keep a close eye on the company as it continues to find its footing.

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