This has been a pretty crazy year. Dozens of companies have seen their chieftains resign because of accounting irregularities stemming from the inappropriate backdating of stock option grants. Won't it be great to head into the creature comforts of a new year, when CEOs get axed for failing their companies in more conventional ways?
Yes, 2007 promises to have a few notable departures at the top. Whether they're corporate-world rock stars who have been exposed as one-hit wonders, or capable helmsmen who are simply struggling in a trying environment, shareholders aren't patient when CEOs are messing up on their dime.
So let's get into four leaders who are clearly in the hot seat at the moment. We'll delve into what got them there and what they can do to save their hides before it's too late.
Kevin Rollins, Dell
Things aren't going so well at Dell Computer
It's also not helping Rollins any that over at Hewlett-Packard
Rollins has one more chance, though. The PC industry has been hungry for the latest incarnations of Office and Windows Vista to spur hardware upgrades, and that time has finally come. The corporate rollout is in the works, and that's sweet music to Dell and its bread-and-butter enterprise bent. Dell should shine brighter over the next few quarters. If it doesn't, fare thee well, Rollins.
Hugh Panero, XM
It's been a rough year for XM Satellite Radio
XM has a good story to tell. It's on track to produce positive operating cash flow this quarter. It's bleeding slower than Sirius
What can save Panero? If the new Oprah Winfrey channel or the brilliant On marketing campaign can help it tug back at market share, the market may have no choice but to grant XM the larger market cap. Even if XM fails on that front, continued bottom-line improvement may save Panero's hide if XM is seen as the more efficient operator and more than just buyout bait for Sirius.
Paul Pressler, Gap
How quickly has Gap
Still, the market gave Pressler the benefit of the doubt. Turnarounds take time, and he was just starting to lay his handprints on the company. Then came 2004, when comps clocked in flat. A year later, same-store sales resumed their troubling ways by sinking 5% lower. It's only getting worse with comps off by 7% through the end of November.
How many retailers do you know that have nailed just one year of positive comps on this side of the millennium? If one argues that there's more to retail than comps, Gap also lowered its profit guidance last month. The company now expects earnings per share to fall between 15% and 19% this year.
Yes, the company is going the wrong way, and Pressler has slipped on a Banana Republic peel. Salvation? It doesn't look good here. Even a positive step in comps early in 2007 will only be seen as the result of an easy lay-up off its sandbagged past. It's going to take dramatic improvements in comps and earnings to save Pressler now.
Terry Semel, Yahoo!
It's not easy to see Semel in the hot seat. When he joined Yahoo!
Yahoo! could have gone the way of Excite, AltaVista, or Lycos. Instead, the company had the vision to latch on to paid search by acquiring Overture, and a promising model was born. So, yes, Semel saved Yahoo! then, but is he hampering Yahoo! now?
Cynics will point to how the company gets smoked by Google
Because of this month's shakeup, Wall Street will let Semel slide for another quarter or two. After that, if Yahoo! still finds itself struggling at the quarterly podium as Google whizzes on by, another executive shakeup will be in the cards, and it's one that Semel may not survive.
Longtime Fool contributor Rick Munarriz doesn't savor being the bearer of bad news, though he recognizes that a lifespan can be short at the top if you don't deliver. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
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