Ranbaxy CFO Exits Adding To Firm's Management Changes

Ranbaxy Laboratories RANBAXY.BO, the Indian based but Japanese majority owned generics pharmaceutical firm, just the other day lost its long time employee and current CFO, Omesh Sethi. Sethi announced his resignation from the firm without any explanation. The resignation comes approximately six months after the firm lost its CEO, Atul Sobti, back in August. Ranbaxy, one of the largest generic drug manufacturers and the largest by sales in India, has been beset with a number of problems. The company come under increased scrutiny and ultimately an import ban on a number of its generic drugs by the United States FDA back in 2008 after it was discovered there were a number of manufacturing defects at its plants. According to an article in Bloomberg,

The Food and Drug Administration in the U.S., the world’s largest drug market, in 2008 blocked the import of more than 30 generic medicines from two Ranbaxy factories in India because of manufacturing defects. There is no evidence the drugs are harmful though the violations may lead to defective products, the FDA said at the time.

The firm also lost its original CEO not long before Atul Sobti was hired. According to The Economic Times of India,

The departure of the CFO follows exit of other top senior executives which began with promoter and CEO Malvinder Singh's abrupt resignation in May 2009. A year later, his replacement Atul Sobti also stepped down citing differences with the Japanese firm in running the company.

The problems at the firm were complicated by the fact that control of the firm was moved to Japan after Daiichi Sankyo, one of the largest pharmaceutical company's in Japan, took a 64% controlling interest in the firm. The continuing management turmoil at the firm appears to relate to Daiichi Sankyo's approach for the firm. There was little dispute back in August when the firm's CEO, Atul Sobti resigned. He had major differences with Daiichi's approach to management and strategy. Investors need to keep a close eye on the firm. Ranbaxy has been making great strides to resolve the manufacturing problems that resulted in the U.S. import ban. So far, the firm still does not have a CEO permanently in place.

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.

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New CFO at Bristol Myers Squibb May Mean Changes

Bristol-Myers Squibb's BMY (NYSE) board of directors recently elected Jean-Marc Huet senior vice president and chief financial officer. According to AccountancyAge.com,

The change which will take place on March 31 and comes one month after the pharmaceutical company reported an ‘impairment charge’ of $275m in auction rate securities, consisting in part of sub-prime mortgages for the fourth quarter, according to CFO.com.

Prior to joining Bristol-Myers Squibb, Huet served as chief financial officer at Royal Numico N.V. in Amsterdam. Before working at Royal Numico he was an executive director, Investment Banking Services, at Goldman Sachs International in London. Huet's appointment comes at the same time the firm also promoted Lamberto Andreotti to Chief Operating Officer. The management changes indicate something is happening at the firm.

Huet is known as a deal maker and is expected to work well with Bristol-Myers Chairman and CEO, James M. Cornelius. His appointment may be an indication that Bristol Myers is getting ready to do some acquisitions or looking to get itself acquired. Chris Kaufman of Reuters Deal Zone wrote a blog March 5th entitled, A Deal Maker for BMY in which he stated,

Huet’s M&A experience would fit well with that of Chief Executive James Cornelius who took the top spot last April. Cornelius had been chairman of medical device maker Guidant, and spearheaded its sale for $27 billion to Boston Scientific Corp just months before assuming his interim leadership role at Bristol. Bristol-Myers saw some divestment activity in December, announcing plans to sell its medical imaging business for $525 million to a private equity group as part of an effort to focus on its higher-profit prescription medicines, and has embarked on a major restructuring that will eliminate 10 percent of its work force and close more than half its factories over the next three years.

Keep a close eye on Bristol-Myers Squibb and particularly Jean-Marc Huet.

More Sub-Prime Fallout - CIBC

Canadian Imperial Bank of Commerce CIBC CM (TSX) a company racked with financial and management difficulties announced today that Brian Shaw, chief executive officer of CIBC World Markets, would be replaced by TSX Group Inc. CEO Richard Nesbitt. The bank's Chief Financial Officer Tom Woods would replace Ken Kilgour as risk officer. The bank has had a huge exposure to sub-prime debt and had to act. According to a Streetwise blog story from Toronto's Globe and Mail newspaper,

Unlike Citigroup and Merrill Lynch directors, the CIBC board did not hold Mr. McCaughey (the CEO) accountable for the bank’s still-to-be-quantified sub-prime loses, with Mr. Kilgore and Mr. Shaw leaving in the wake of this hit. Directors now need to be asking whether the new executive team will be more adapt at steering clear of accidents.

According to a piece by Jonathan Ratner in today's Canada's Financial Post,

Dundee Securities analyst John Aiken said he was one of many that believed more management changes were needed at CIBC after an apparent disruption in its risk management policies led to an “incremental, outsized exposure to U.S. subprime real estate.”

It remains unclear whether the new management team is up to the job to straighten out the problems facing the bank. Stay tuned.

For more:

Financial News
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Canoe Money

Double Eagle Petroleum Doubles Management Changes

Double Eagle Petroleum DBLE (NASDAQ), an oil and gas exploration company in the Rocky Mountains of Utah and Wyoming, is about to lose both its CEO and CFO.

Today the company announced its Board of Directors appointed Kurtis Hooley, the current director of business development and financial planning, to be its Chief Financial Officer. Prior to joining the company, Hooley served as the President of MKH Enterprises from 2003 to 2006. Hooley replaces Lonnie Brock, who on December 5, 2007 notified the company of his resignation in order to take a position with another company. Brock will remain at Double Eagle through December 31, 2007 and will assist in the transition to the new CFO. Five days after the Brock announcement, Stephen Hollis, the company's CEO since 1994 and a long-time employee of the firm, notified the company's Board of Directors that he desired to resign from his position as CEO and Chairman as of December 31, 2007. Hollis indicated he was willing to continue as an employee to provide advice and expertise concerning the Company's operations for at least an additional year through December 31, 2008. He will continue as a member of the Company's Board of Directors.

The company's press release stated,

Neither Mr. Brock nor Mr. Hollis resigned from their respective positions due to any disagreement with the Company, or because of any improprieties or any other matter relating to the Company's operations, policies or practices.

The Board appointed Richard Dole, who has been a director of Double Eagle since March 2005, as Chairman. As part of his responsibilities, Dole, on behalf of the Board, will coordinate company activities and management until a new CEO is selected.

The double loss in top management does not bode well for a company that has not displayed many positive financial aspects over the last few years. While the company recently had a favorable legal finding with regard to a lawsuit initiated by environmental organizations, the loss of its long time CEO and its CFO indicates there may not be great financial opportunities awaiting the company over the next few years.

Keep an eye on the interim management of the firm and the individual the company finds to replace Hollis as CEO.

For more:

CNN Money (more)
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Trading Markets
Small Cap Investor

Multiple Management Defections From Toyota North America

Liberum Research often monitors multiple management changes at companies. We rely on this technique as one of many methods investors can use as a way to evaluate a firm as a potential investment opportunity (positive or negative) as it relates to management change. Today's International Herald Tribune for example, focused on recent senior executives that have left Toyota's North American division for rivals in the United States.

Toyota, as everyone is aware, has been giving American and its Japanese competitors constant pressure as the firm continues to move to new heights. The major defections could have an impact ultimately on Toyota's North American operations. In the story the writer, Yuri Kageyama states,

In just the last three months, three senior executives in Toyota's North American business abruptly left for rivals. The high-profile defections underline a new danger looming for the Japanese automaker - the lure of U.S. companies wooing the best in its ranks.

The executive exodus signals the overseas growing pains at Toyota Motor. It now sells three-quarters of its vehicles outside Japan and runs more than 50 manufacturing plants abroad, including five vehicle-assembly plants in the United States.

Always keep an eye on multiple management changes at companies, even when those changes are below the top C-level executives. Such changes may be an indicator of something going on at the firm.