Struggling A and P Takes on CEO After Another Poor Quarter

The Great Atlantic and Pacific Tea Company GAP (NYSE), often referred to as as supermarket chain A&P, has appointed Sam Martin its new CEO and Chairman. The company has been struggling. Martin who just left his position as COO for Office Max replaces Ron Marshall as the CEO. Marshall, according to the press release,

left his position just after five months at the helm.

The struggling retailer is faced with another key management change at the top while trying to right itself. Just yesterday as part of the CEO announcement the company also announced its quarterly earnings which were far from reassuring. The firm reported a fiscal quarterly loss of $122 million. While the selection of a CEO at the firm has been an example in how CEO selections should not be made, Martin’s selection may actually be the medicine the firm needs.

Martin, who some speculated wanted to become the CEO of Office Max and may have known he was going to be passed over, has the requisite qualifications to help The Great Atlantic and Pacific Tea Company right itself has both high level operational expertise and a background in the food/supermarket business. Prior to his stint as COO at Office Max, which began back in 2007, Martin served as an executive at Wild Oats before it was acquired by Whole Foods. Prior to his work with Wild Oats Martin served with a number of other supermarket/food chains (Shopko stores and Fred Meyer).

Supermarket chains in general have been struggling during the economic recession as consumers seek out new ways to reduce their food bills and still get convenience shopping. Martin has a real challenge ahead of him but he appears to have the right type of expertise and business acumen to make a go of it. Keep a close eye on the company there may be some positive surprises over the next year.

For more:

MarketWatch

Businessweek

NASDAQ

CEO Watch - Nokia CEO Olli-Pekka Kallasvuo

Over a month ago Ibriefly examined the continuing problems Nokia NOK1V, the world’s largest phone manufacturer, has found itself facing with the explosive growth of the smartphone market. Nokia unlike Apple and even Motorola, HTC, Samsung etc. has been a true laggard in this marketplace. With this growing competition in the smartphone marketplace Nokia’s share price has declined a whopping 67% in the three years since Apple introduced the iPhone (according to an article in Bloomberg). For some time some shareholders and analysts have been calling for the CEO, Olli-Pekka Kallasvuo’s head. The CEO has recognized the problems facing Nokia and recently has made some internal management changes to address the issues. Time is running out as shareholder and now possibly board member patience is dissolving. It is hard to see at this point in time as the iPhone4, Google Android phones, Blackberries and other sophisticated smartphones are coming into the marketplace what Nokia can do to reverse its problems. Nokia needs a big winner and it needs it soon.

Fair or not it, looks as if Olli-Pekka Kallasvuo’s time as CEO may be limited. It may be the right time for the Finnish based firm to hire a seasoned CEO from outside the firm.

For more:

Business Insider

2nd Quarter Executive Turnover Remains Slow - Inkling of Shift Arises

Executive turnover in the second of quarter of 2010 continues to decline as the financial crisis and the related recession still impact executives at companies large and small. While overall worker employment has remained a serious problem, companies have done little to change top executives during the economic crisis. This is not to say there have not been major executive changes at public companies but rather the totals have been lower than in the past. Investors need to keep on top of executive changes as a way to monitor their investments or investments they might be considering.

Second quarter 2010 CEO and CFO overall changes both dropped 16% when compared with the second quarter totals for 2009. Overall C-level changes (defined by Liberum as covering board of directors, CEOs, CFOs, COOs, CIOs, presidents, EVPs, SVPs down to VPs) for the second quarter of 2010 dropped a whopping 37% when compared with the second quarter of 2009. The drop in C-level changes for the second quarter of 2010 was much smaller when compared with the first quarter total for 2010 - the drop was only 7%. The percentage drops for CEO and CFO changes for the second quarter were also much smaller when compared to the first quarter of 2010 than the totals for the first quarter of 2009. Below are three separate graphical representations of the quarterly change totals for CEO, CFOs and C-level executives.

CEO Watch List- Steve Ballmer, Microsoft Update #1

Microsoft MSFT (NASDAQ) and particularly Steve Ballmer, the firm’s CEO, continues to find itself on the hot seat. More and more analysts and tech pundits are beginning to question the firm’s direction and leadership. Yesterday, Kara Swisher of the Wall Street Journal’s All Things Digital examined some of the problems facing Microsoft and it’s chief executive in her piece entitled, What to make of the Microsoft-Is-Falling-And-Can’t-Get-Up Meme. Swisher is by no means in the camp seriously worried about the firm’s immediate future but she suggests there is a real need for some change at the firm. According to Swisher,

Microsoft, as all tech companies do, needs to change, and a lot faster than it has so far; the company has been trying mightily to do so in search and recently, in mobile, where it is woefully far behind; its leadership under Ballmer, who took over from co-founder Bill Gates, has been meh enough to keep its stock moribund.

But, by no means recently–even if there is a better CEO for Microsoft out there than Ballmer–have I found the company execs ignorant about the tougher issues or unwilling to consider changes needed.

In fact, in its high-flying days, Microsoft did have a tin ear to criticism. No longer, and I would call its execs appropriately concerned about fixing its issues, although their efforts do suffer from the company’s massive size and inertia in making the right moves.

Thus, they certainly might not be successful at innovating, although these are the very kinds of problems Apple CEO Steve Jobs solved when he returned to a rotten company in what, in its current glory days, seems eons ago.

And Microsoft has been getting the same questions that are beginning to be asked about Google.

… That’s why–at this point–I can see no need for panic to set in about Microsoft…

… As for today, even though we are all terminal, the sky looks like it will remain intact at Microsoft for a little bit longer.

Swisher is rather pragmatic about Microsoft’s situation but pragmatism does not always reign particularly when you are talking about one of the largest and formerly most successful tech firms in history. Keep a close eye on Ballmer and Microsoft.

Recommended Reading - CEO Succession Planning Lags Behind Research Finds, Stanford Graduate School of Business

The gap in succession planning at corporations continues to raise serious problems for companies. The Stanford Graduate School of Business’ June issue examined research on CEO succession planning conducted by Heidrick & Struggles, the executive search firm, and Stanford’s Rock Center for Corporate Governance. According to David Larker a professor at Stanford’s Graduate School of Business,

“We found that this governance lapse stems primarily from a lack of focus: boards of directors just aren’t spending the time that is required to adequately prepare for a succession scenario.”

To get a summary of the research’s findings go to Stanford’s GSB News.

CEO Watch List- Steve Ballmer, Microsoft

I have resisted putting Steve Ballmer, Microsoft’s MSFT (NASDAQ) CEO, on the Liberum CEO Watch List for sometime now. Ballmer’s ongoing startling statements about Microsoft and the industry along with his lack of innovation over the last number of years has begun to be examined by a number of specialists in the field. Rumors even are heard about bringing Bill Gates back. While it is hard to believe Ballmer is really at risk, maybe he should be. Just today, Adam Lashinsky, the Senior Editor for Fortune wrote a piece in which he said,

He (Ballmer) is presiding over the umpteenth reorganization of the company he has run for years, having succeeded his pal, Bill Gates. His online business, whose Bing search engine is making modest gains against industry leader Google, lost more than $700 million last quarter.

Yet here was Ballmer traveling down a semantical rabbit hole over the future of the PCs. In Ballmerworld, it doesn’t matter that the PC is shrinking in relevance. Any device is a computer, and people will want to use Windows because they’re so familiar with it. By the way, Windows 7, Microsoft’s latest release, is crushing it, further proof that computer users love Microsoft.

CEOs certainly are paid to put on a happy face and represent as well as possible. But hearing Ballmer at the Wall Street Journal’s D conference left me with one question: What is the guy smoking? Windows 7 has been a “success” in part because Microsoft’s previous effort, Vista, was such a stinker. Businesses the world over held off so long on upgrading their PCs that once Microsoft got it right they had no choice but to start replacing obsolete equipment.Semantics aside, Ballmer knows as well as anyone that the future of personal-computer industry is in mobile devices. Here, Microsoft’s hand is so weak that its most important global equipment partner, Hewlett-Packard (HPQ), is buying a beleaguered smartphone maker, Palm (PALM), for its superior mobile operating system.

Ballmer really needs to show he understands his marketplace and his competition and how he expects to deal with it. So far, in this regard he has been a dismal failure. Under his tutelage the stock has not really shown much shine either.Stay tuned.

More:

Silicon Alley - Meet The New CEO Of Microsoft

Lagging T-Mobile USA Opts for New Strategy And CEO

T-Mobile USA, which is owned by Deutsch Telekom AG (XE: DTE), the fourth place mobile phone carrier in the US behind Verizon, AT&T and Sprint, has finally opted for change. Early today the company announced that long time CEO, Robert Dotson, will be stepping down in February of 2011. In his place, the company appointed Philipp Humm to be the CEO-designate as of July 1. He will officially take over the CEO slot on February 2011. T-Mobile has continued to lag its key rivals in the United States and for some time now has needed a new strategy. Humm was previously the CEO of T-Mobile Deutschland from 2005 to 2008 and is currently the CRO of sales and services for Europe for Deutsch Telekom. He is well respected, understand the company and will bring new ideas to the table.

It is about time T-Mobile got serious about its operations in the United States. The firm needs to be either acquired or come up with a new strategy to compete in the ever competitive wireless marketplace. The selection of Humm appears to make a great deal of sense. Currently, T-Mobile USA has falling subscriber numbers and increasingly poor service a combination for further problems. According to a story by Archibald Preushat for the Wall Street Journal T-Mobile USA,

… likely had the worst first quarter out of all the wireless players in terms of subscriber-base development. T-Mobile USA lost 118,000 contract customers, consistent with recent trends, but the number of net new prepaid customers fell 92% from the fourth quarter, a startling drop that shows the strength of some of the other prepaid players. Sprint Nextel, which continues to lose its more valuable customers, showed particular strength in its prepaid business.

We may see some changes before the official change over in February of next year. Investors must keep a close eye on all the upcoming management changes and possible strategy shifts. Stay tuned.

For more:

GigaOm

Recommended Reading - Examining the Impact of SEC Guidance Changes on CEO Succession Planning, The Conference Board

Edward Ferris and Justin O’Brien recently published a paper for the Conference Board (members only) entitled, Examining the Impact of SEC Guidance Changes on CEO Succession Planning. The paper is a must read for anyone interested in CEO succession and its implications for corporate governance and corporate performance. According to the report as a result of the recent change by the SEC,

… regulators have reframed CEO succession as a risk management issue and placed its responsibility firmly in the boardroom. Succession planning responsibilities are redefined as “a key board function” and “a significant policy (and governance) issue … so that a company is not adversely affected by a vacancy in leadership.”

… the implications seem clear: boards will have to set more specific standards and requirements for CEO succession, take responsibility for results, and exercise discernable independence in the process.

Against this backdrop, the report seeks to answer three questions:

• What is the likely impact of this policy reversal?

• How will it practically affect the board?

• What should shareholders know about CEO succession plans, and why?

I highly recommend anyone interested in the succession issue read the paper. If you are not a member of the Conference Board, you might want to contact one of the authors, Edward Ferris, at the Hedge Fund Solutions Research Center. His email is eferris@hedgerelations.com.

Nokia Awakens from Big Sleep - Is it too late?

Nokia NOK1V (Finland), the world’s largest maker of mobile phones, has for sometime now been lagging the big players in smartphones. Nokia’s Management has seemed to have been asleep at the wheel while Apple, RIM, even Motorola and Google have leapfrogged the firm with regard to smartphones. Finally after much consternation by investors and analysts, the firm just announced the appointment of Anssi Vanjoki, a longtime executive at the firm, and the company’s current marketing chief to serve as the new smartphone chief. The announcement along with other management related changes, some of which have occurred over the last year, continue to put the firm in a spotlight they would much rather avoid.

Nokia needs to get a fire under its design and production capabilities to compete with the other big players eating the firm’s lunch. The latest changes are expected to go into effect by July 1. Keep a close eye on Mr. Vanjoki as he takes on a truly challenging task that is vital to Nokia’s continued success.

More:

Bloomberg updated 5/12

US Cellular Selects Fast Food Marketing Exec As CEO

US Cellular USM (NYSE), the wireless voice and data service provider, announced the selection of Mary Dillon to be the firm’s new president and CEO. Ms. Dillon will succeed John Rooney who announced his planned retirement back in February. Ms. Dillon has been the EVP and Global Chief Marketing Officer of McDonalds since 2005. Her selection appears to be a terrific choice for CEO. She brings to the table the type of executive needed to help US Cellular compete in its market. She has both marketing and operational expertise. Ms. Dillon will take over the reigns of the firm on June 1. She faces real challenges to the company’s business but she has the skills to help the firm meet those challenges.

Rooney’s announcement back in February that he would be retiring raised concerns for the company. He had been instrumental in building the firm from a small company that collected roaming fees as its key source of revenue into a powerful regional carrier.

Keep a close eye on the transition and the business moves Dillon makes after she takes over the company.