What Really Happened At UBS?

Last week's sudden and unexpected departure of UBS AG UBS (NYSE) CEO Peter Wuffli appears to be characterized by old fashioned Swiss secrecy. The bank remains silent on why Wuffli departed. Was he forced out after the Board went against the wishes of its powerful Chairman Marcel Ospel to make Wuffli his successor or did he jump ship after failing to get the nod for the Chairmanship? Whatever the reason, UBS has appointed Wuffli's deputy 42 year old Marcel Rohner to replace Wuffli immediately.

Rohner, a PhD Econometrician, has been credited with successfully running the bank's wealth management business. The bank's wealth management business has been responsible for a large portion of the company's operating profit. The big question that seems be difficult for the company to put to rest is whether Rohner will embark on a new business strategy possibly breaking up parts of the bank, specifically selling off the investment bank or continue on as things are now. So far the bank, and its new CEO, Rohner insist that corporate strategy will remain the same as it was under Wuffli. We will just have to wait and see.

The shakeup at UBS, nevertheless, remains a full-fledged puzzle. Under Wuffli's leadership UBS thrived for a number of years. Success continued both in its private banking and wealth management business while at the same time the bank performed exceptionally well in investment banking. This all changed over the past year. Investment Banking starting having some difficulties, on top of that the bank was forced to get out of a troubled hedge fund which tarnished its image, and there were a number of very high-profile defections from the firm, the most prominent being the departure of Ken Moelis, who headed up investment banking. Many analysts attribute these problems to Wuffli's sudden departure. The most surprising aspect of the management upheaval was the unanimous decision by the board not to follow the wishes of the bank's all-powerful chairman, Marcel Ospel to make Wuffli his successor. Then on top of this failure to get his hand picked successor approved, the board then went on to ask and get Ospel's agreement to continue on as chairman for another three years after he had already made his wish to retire well-known. The recent management turnover at UBS remains an unsolved puzzle.

Investors need to keep a very close eye on corporate moves coming out of the bank for the next number of months.

For more on the story see:

Financial News (July 11, 2007)
Financial Times (July 10, 2007)
Here is the City News
Financial Times (subscription req.)
UBS Press Release
Forbes
Bloomberg
International Herald Tribune
Euronews
Swissinfo
Bloggingstocks

Slurpee Former Chief To Save Blockbuster?

Back in May, Blockbuster BBI (NYSE) forced its Chairman and CEO John F. Antioco out of office after pressure from outside investor Carl Icahn and the its board of directors. Today Blockbuster announced that it has hired James W. Keyes, a former CEO of Seven Eleven to become the company's CEO and Chairman. Keyes, who left Seven Eleven in 2005 after it it was bought, is known as a keen retailer who successfully ran a national network of small-box retail locations where he managed to introduce new products and new technology to an industry constantly under change.

At first glance, his appointment appears to be a very good choice. Blockbuster is currently working hard to make its latest strategy known as Total Access a success against its prime competitor Netflix. Through continuing marketing efforts the company has tried to convince consumers that its retail store network offers an added advantage for consumers when using Blockbuster's online rental service. Unlike Netflix consumers can go to their neighborhood Blockbuster store to return a DVD rather than wait for returning the DVD by mail. For now the concept sounds like a hard sell when you consider that Blcokbuster to stop the bleeding is closing many of its stores to remain competitive. Keyes does offer a background in technology and retailing which at a minimum can only be helpful to the company and an improvement overall Antioco. Keyes has a tremendous challenge ahead of him. Blockbuster does not even have a movie download system under development. Keyes does have one additional thing going for him, he appears to have the confidenc eof Carl Icahn and board.

We will just have to wait and see.

For more on the story:

Star Telegram (next day update)
CNBC
CNN Money
COMPUTERWORLD BLOG
BLOGGINGSTOCKS
Forbes
Star Telegram

Bank Visionary Forced to Resign - Is there more?

Commerce Bancorp CBH (NYSE) CEO and Chairman Vernon Hill was forced to resign after the company reached an agreement with federal regulators to bar transactions between company directors and outside vendors. Hill as well as others in the company came under scrutiny for their business dealings with insiders. Just as an example, Hill's wife, who owned an architectural design firm, was getting business from the bank for years. The company announced today it had settled two federal regulatory probes.

Hill, the bank's founder, was often referred to as a bank visionary. He was responsible for the bank's tremendous growth and success over the last number of years.

Commerce promoted three executives to the new office of Chairman for the bank subsidiary to replace Hill. As part of its agreement with regulators, the company stated it will continue to cooperate with any regulatory investigation of insider and insider-related transactions.

A number of analysts believe the loss of Vernon at the helm has made Commerce Bancorp a potential takeover target. In early trading the stock responded positively to the agreement and Vernon's resignation.

Speculation has also been raised that Hill's problems have not ended with his resignation. Stay tuned.

For more on the change and the agreement see:

Philadelphia Business Journal (July 6)
CNN Money
SEC 8K filing
Bloomberg
Forbes
Philadelphia Inquirer
Philly.com
Reuters
Wall Street Journal (subscription req.)

Sub-Prime Market Woes Impacts Management Turnover

Management under the gun today seems to respond a bit more quickly than in the past. Beazer Homes USA BZH (NYSE) one of the housing related stocks getting hammered, fired its chief accounting officer, Michael Rand yesterday. According to published reports he was fired for attempting to destroy documents while the company was under investigation. The announcement came after it was made public that the FBI and other agencies were investigating the firm with regard to fraud in its mortgage lending practices. Back in March, Business Week did a story indicating that Beazer was one of a number of companies under investigation by the FBI and U.S. Attorney's Office in North Carolina.

Beazer back in May agreed to cooperate with the authorities undergoing the investigation. The company appears to have acted quickly after its own internal investigation found possible wrongdoing by Rand.

For more on the story see:

BloggingStocks
Bloomberg Update 3
Forbes
Atlanta Journal Constitution
CNN Money
StreetInsider

Sprint Nextel Hires Strategic Planner To Help Direct Ship

Sprint Nextel S (NYSE), the current weak sister of the major wireless carriers, today announced the hiring of Keith Cowan to serve as president, strategic planning and corporate initiatives. The hiring comes as pressure continues to grow on Sprint's top management. Cowan's appointment is a recognition by the company that it needs to get new blood and ideas into its strategic planning process. Management hopes it can find ways to get shareholders in a better frame of mind on the company's future. Cowan appears to be a good pick. He has had extensive experience previously working for BellSouth for over ten years where at one time he was in charge of planning and most recently, was executive vice president for Genuine Parts, an automotive supplier.

Sprint's CEO,Gary D. Forsee said,

"Keith is a results-oriented individual and will be a strong addition to the Sprint Nextel leadership team,...He has a track record of performance in communications and technology that will be a tremendous asset to our company as we continue to seek ways to unlock shareholder value."

Keep a close eye on Sprint Nextel's strategic plans going forward.

New Take on JetBlue Founder's CEO Job Loss

Chris Isidore, a writer for CNN's money.com in an article today addressed the changes at the top of JetBlue back in May. Isidore interviewed former CEO and founder David Neeleman on his views regarding his loss of the top spot at the airline. We covered this change in our blog back in May. More food for thought.

A.P. Moeller-Maersk Sweeps Out Top Management

A.P. Moeller-Maersk MAERSKb.CO (Copenhagen), the shipping company, announced major management changes. Jess Soederberg, who has led the company since 1993, unexpectedly announced his retirement. His announcement appeared to be related the company's profit decline for 2006. In his place, the company appointed Danish brewer Carlsberg A/S's CEO Nils Smedegaard. Smedegaard has headed Carlsberg since 2001. The scheduled change will occur on December 1. The announcement came at the same time two other key executives at A.P. Moeller-Maersk announced they would be leaving, Tommy Thomsen and Knud Stubkjaer.

Chairman of the Board Michael Pram Rasmussen stated the following when discussing the new CEO appointment:

“Through his previous work Nils Smedegaard Andersen has gained as well as proven the skills which the Board finds necessary in an ever changing world and in addition he possesses the personal qualities matching the values of the A.P. Moller - Maersk Group."

The announced changes were unexpected and could have a real impact on the firm. A number of analysts have already raised concerns about the Andersen appointment and the significance the three executive changes could have on the firm. For more on the change, check out the following:

Financial Times
Bloomberg
Hemscott
Forbes

Update on Pep Boys New CEO

Back in April 13 I highlighted the newly appointed CEO to Pep Boys PBT (NYSE), Jeffrey C. Rachor. So far, Rachor has shown his stripes and is working hard to turn things around. Check out the June 21, Associated Press article.

For more see:

Philadelphia Inquirer (Dow Jones article)

Barron's Comments on Liberum's May Picks

Last week Barron's ran a piece on Liberum's monthly C-level management change statistics and its list of 22 CEO changes during the month that investors might wish to review for investment consideration.

See Barron's (subscription req. for full access)

Nissan Net Profits Decline 1st Time Under Goshn - What's in Store?

Nissan savior, Carlos Goshn has refused to resign as CEO of Nissan Motors Company 7201 (JAPAN) after the company registered its first net profits decline since he took over the firm. Goshn originally came to Nissan in 1999 when the automaker was on the verge of bankruptcy. He has been repeatedly cited as a miracle worker. According to an article on France 24 Goshn, who has recently found himself under growing pressure, stated at a shareholders conference in Japan,

"As long as I have the shareholders' trust and the employees' trust, I will remain..."

Goshn went on to say,

"The problems we are facing today are very small compared to the problems we had in 1999."

Goshn remains a mythic figure in the industry but you might want to stay tuned to how things play out. Shareholders have less and less patience and the industry continues to change dramatically.

See more:

Financial Times