Skullcandy (NASDAQ:SKUL) has had its skull rocked as a public company, but a new CEO may help turn things around.
Shares of the maker of in-ear headphones opened 8% higher after announcing that Nike's (NYSE:NKE) Hoby Darling will be taking the helm at Skullcandy.
Darling was the GM of the Nike+ Digital Sport division of the footwear giant. Fueled by the success of last year's NikeFuel fitness-monitoring bracelet and the growing popularity of NikeFuel, the division was growing in importance at Nike. Did Darling feel that the Skullcandy opportunity was too good to pass up? Did Darling feel that the digital sport market was about to get more competitive now that even the new Samsung Galaxy S4 smartphone packs a pedometer and proprietary tracking applications?
Skullcandy will be a challenge.
The stock has been a colossal disappointment since going public at $20 two summers ago, and things got worse earlier this month when Skullcandy offered dreadful guidance after a mixed quarterly report. Skullcandy's eyeing a loss on a 30% drop in revenue in the current quarter. Analysts were eyeing a profitable showing with double-digit top-line growth.
The prospects were brighter before Skullcandy went public. The success of Apple (NASDAQ:AAPL) -- first with the iPod and then with the iPhone -- was a massive opportunity for Skullcandy. Apple's stock earbuds were dull. Skullcandy's alternatives were edgy and colorful.
The market for third-party accessory makers riding on Apple's coattails have been snipped short lately. Skullcandy and Zagg (NASDAQ:ZAGG) have fallen into the single digits.
Unlike Skullcandy, Zagg's still growing sales of its invisibleSHIELD protective covers and Bluetooth tablet keyboards. However, both companies failed to live up to Wall Street's profit targets during the holiday quarter.
It will be interesting to see if Darling parlays some of his work at Nike+ Digital Spot into making Skullcandy accessories more interactive. Skullcandy's roots came in the field of extreme sports, and one can argue that folks buying earbuds are on the move.
However, it's probably Darling's earlier work with Nike's affiliate brands and at youth-oriented retailer Volcom before that which ultimately got him the gig. There's a fading brand to bring back to life, and Darling has his work cut out for him.